International Economic Law and Policy Bloghttps://worldtradelaw.typepad.com/ielpblog/
en-USMon, 19 Nov 2018 17:18:39 -0500http://www.typepad.com/http://www.rssboard.org/rss-specificationSubscribe with My Yahoo!Subscribe with BloglinesSubscribe with NetvibesSubscribe with PageflakesSubscribe with My AOLSubscribe with GoogleSubscribe with NewsGatorThis is an XML content feed. It is intended to be viewed in a newsreader or syndicated to another site, subject to copyright and fair use.The Geoeconomic World Orderhttp://feedproxy.google.com/~r/ielpblog/~3/FjEsBOvVfeQ/the-geoeconomic-world-order.html
https://worldtradelaw.typepad.com/ielpblog/2018/11/the-geoeconomic-world-order.htmlHere is the opening of a new blog post from Anthea Roberts, Henrique Choer Moraes, and Victor Ferguson over on Lawfare: We appear to be entering into a new geoeconomic world order, characterized by great power rivalry between the United...Here is the opening of a new blog post from Anthea Roberts, Henrique Choer Moraes, and Victor Ferguson over on Lawfare:

We appear to be entering into a new geoeconomic world order, characterized by great power rivalry between the United States and China and the clear use of economic tools to achieve strategic goals. This increased convergence of economic and security thinking and strategies is likely to lead to a significant restructuring of the laws and institutions that govern international trade and investment.

I worry that the authors are correct about where we are going. I hope we are not too late, and that some creative thinking can get us moving in another direction.

7.732. Thailand argues that, insofar as the Charges are inconsistent with the provisions of the CVA, such inconsistency is justified under Article XX(d) because the Charges are measures "necessary to secure compliance with laws or regulations" and that such inconsistency is also justified under Article XX(a) because the Charges are measures "necessary to protect public morals". As a threshold issue, Thailand submits that Article XX is available to justify inconsistencies with the CVA. ...

The Panel set out the issue as follows:

7.745. We understand the parties to agree that the applicability of Article XX of the GATT 1994 to the CVA must be determined on the basis of a textual analysis of the CVA and the GATT 1994. Specifically, we understand Thailand to accept that Article XX does not automatically apply to obligations in the covered agreements other than the GATT 1994, as reflected in its view that Article XX applies to other covered agreements where there is "a clear textual link between the provisions under which claims are made and the text of the GATT 1994, in particular Article XX." We understand the Philippines to accept that the absence of a specific textual reference to Article XX is not in and of itself dispositive, as reflected in its view that panels and the Appellate Body "have required sufficiently clear affirmative language to justify its application outside of the GATT 1994".

7.746. Therefore, we start our analysis with an examination of the textual bases identified by Thailand. Following that, we address Thailand's argument that the inapplicability of Article XX to the CVA would lead to an absurd result since Article XX would be available to justify a violation of Article VII of the GATT 1994, but not the Agreement that implements that provision. We then address Thailand's argument that Article XX applies to the CVA since this is the only way to establish a balance between Members' obligations and Members' right to regulate. In our assessment of that issue, we consider the consequences of the inapplicability of Article XX to the CVA on Members' right to enact measures to combat customs fraud.

7.747. Thailand identifies three textual bases to support its assertion that Article XX of the GATT 1994 is available to justify violations of the CVA. First, Thailand refers to the full title of the CVA, namely the "Agreement on Implementation of Article VII of the GATT 1994", which refers to Article VII of the GATT 1994.1603 Second, Thailand refers to the language in the preamble to the CVA indicating the desire to "further the objectives of the GATT 1994", and recognizing "the importance of the provisions of Article VII of GATT 1994 and desir[e] to elaborate rules for their application in order to provide greater uniformity and certainty in their implementation". Third, Thailand notes that Article XX(d) of the GATT 1994 explicitly indicates that Members may adopt measures necessary to secure compliance with their laws "relating to customs enforcement", which indicates that Article XX(d) "can be used to justify measures … that are necessary to enforce a Member's customs laws". While we recognize that treaty interpretation calls for a holistic analysis, for analytical clarity we will assess these three textual bases in turn.

The whole section of the panel report is worth a read, but I'm going to focus on one of Thailand's arguments:

7.751. Thailand submits that, if Article XX is not available to justify violations of the CVA, this would "result in an absurd situation, contrary to the principle that 'a treaty interpreter must read all applicable provisions of a treaty in a way that gives meaning to all of them, harmoniously'". This result would be absurd, according to Thailand, as this would allow a violation of Article VII of the GATT 1994 to be justified, in principle, under the general exceptions in Article XX of the GATT 1994, but would not allow for the justification of a violation of the CVA, notwithstanding that the CVA is an agreement that expressly implements Article VII of the GATT 1994.

7.752. We observe that the core concept of the "transaction value" established in the CVA is not necessarily identical to the concept of "actual value" as articulated in Article VII:2(b) of the GATT 1994, and that the CVA elaborates on the rudimentary provisions of Article VII by establishing a comprehensive system for customs valuation, comprising a series of multiple different steps and methods subject to detailed rules governing their sequential application. We do not consider that it follows from the fact that Article XX is applicable to the obligations contained in Article VII of the GATT 1994 that there would be a legal conflict or absurd result if Article XX were not applicable to the obligations in the CVA. In our view, it does not follow that the applicability of Article XX exceptions to the general obligations regarding customs valuation contained in Article VII of the GATT 1994 mandates that those same exceptions must also be applicable to the system of customs valuation comprising detailed methodologies found in the CVA. Indeed, the CVA contains specific and technical rules that elaborate how the customs value of imports may be determined, which are additional to, and different from, those found in Article VII of the GATT 1994.

7.753. We also note that, with the exception of China, all of the other third parties in this dispute that expressed a view on the matter, including Canada, the European Union, Japan, and the United States, agree with the Philippines that Article XX is not available to justify inconsistencies with the CVA and that the applicability of Article XX to violations of Article VII, but not to violations of the CVA, would not lead to an absurdity. We note Japan's view that "the CVA is a special agreement on the implementation for a specific article, namely, Article VII of the GATT 1994. Therefore, by its nature, the CVA constitutes special law vis-à-vis GATT 1994, and provides special rules focusing on how Member states should determine the customs value." We also note the European Union's view that "the rationale and nature of obligations set out in the CVA are not such as to justify the conclusion that Article XX should justify breaches in this context".

7.754. Thailand submits that in the context of the TBT Agreement, the Appellate Body found that there exists a "balance" between a Member's obligations and a Member's right to regulate that is "inherent" in the TBT Agreement, and that it was for this reason that Article XX of the GATT 1994 was found to be inapplicable to the TBT Agreement. Thailand considers that "in the case of the CVA, there is no such balance that can be found between obligations it contains and the right of Members to regulate", that there is "no reason why the CVA should be deprived of such a balance", and that therefore "the only way to ensure this balance is respected is for Article XX of the GATT 1994 to be available to justify a measure that is found to be inconsistent with certain provisions of the CVA."

7.755. We observe that the Appellate Body has repeatedly characterized the object and purpose of various WTO agreements in terms of "balance". As Thailand notes, the Appellate Body has articulated the object and purpose of the TBT Agreement in terms of striking a "balance …. between, on the one hand, the desire to avoid creating unnecessary obstacles to international trade and, on the other hand, the recognition of Members' right to regulate", and has said that this "is not, in principle, different from the balance set out in the GATT 1994". The Appellate Body has confirmed that the GATS likewise "seeks to strike a balance between a Member's obligations assumed under the Agreement and that Member's right to pursue national policy objectives". The Appellate Body has also defined the object and purpose of the SCM Agreement as reflecting a "delicate balance between the Members that sought to impose more disciplines on the use of subsidies and those that sought to impose more disciplines on the application of countervailing measures". The Appellate Body has also described accession protocols as containing a "delicate balance of rights and obligations".

7.756. We consider that there is also an inherent balance in the CVA. This inherent balance finds reflection primarily through the relatively limited scope of the substantive and procedural obligations contained in the CVA, including a degree of discretion accorded to the customs authority in implementing those obligations. These obligations elaborate a methodology and a set of procedural obligations that must be followed by domestic authorities when making customs valuation determinations, but these obligations apply only where the customs authority engages in a determination of the monetary worth or price of imported goods for the purposes of levying ad valorem customs duties. Thus, measures taken by a Member to combat customs fraud will not run afoul of the obligations contained in the CVA unless such measures are premised on a false customs value that was determined inconsistently with the provisions of the CVA. This is confirmed by Article 17 of the CVA, which establishes that nothing in the CVA restricts or calls into question the rights of customs authorities to satisfy themselves as to the truth or accuracy of statements made by importers. Given the limited scope and reach of the obligations in the CVA, we see no reason why authorities pursuing the legitimate regulatory purpose of identifying or combatting customs fraud would need to deviate from the system of customs valuation established in the CVA, so as to require recourse to Article XX of the GATT 1994. For these reasons, we do not agree with the premise that there is no "inherent balance" in the CVA, such that "the only way to ensure this balance is respected is for Article XX of the GATT 1994 to be available".

7.757. Based on the foregoing, the Panel finds that the general exceptions in Article XX of the GATT 1994 are not applicable to the obligations in the CVA.

One thing that interests me about this argument is how it might apply to the other multilateral trade in goods agreements. The panel said that there is "an inherent balance in the CVA," which "finds reflection primarily through the relatively limited scope of the substantive and procedural obligations contained in the CVA, including a degree of discretion accorded to the customs authority in implementing those obligations." So what are the implications of this approach for other agreements? Not all of them have such a limited scope, but don't they all have an "inherent balance" of some sort? How does each one's balance -- in particular, its impact on the "right to regulate" -- play a role in this kind of analysis?

I think Thailand is right that making an Article XX defense available for GATT obligations, but not for the obligations in other trade in goods agreements that further articulate those GATT obligations, is "absurd" in a sense. While panels and the Appellate Body can come up with interpretations that limit potential problems, as the Appellate Body tried to do with its interpretation of certain provisions of the TBT Agreement, having the standard defenses available seems useful. Nonetheless, it doesn't seem like the jurisprudence is going in that direction.

]]>Simon LesterMon, 19 Nov 2018 07:59:50 -0500https://worldtradelaw.typepad.com/ielpblog/2018/11/gatt-article-xx-and-non-gatt-wto-agreements.htmlMore WTO Complaints Against China, Including an "Adverse Effects" Nullification or Impairment Claimhttp://feedproxy.google.com/~r/ielpblog/~3/Y2W5AUvrOxA/more-wto-complaints-against-china-including-an-adverse-effects-nullification-or-impairment-claim.html
https://worldtradelaw.typepad.com/ielpblog/2018/11/more-wto-complaints-against-china-including-an-adverse-effects-nullification-or-impairment-claim.htmlAlong with Jim Bacchus and Huan Zhu, I have a new Cato paper out today on using the WTO to make China more market-oriented. Some of the main points are: -- China's economic ambition is good. The world is better...Along with Jim Bacchus and Huan Zhu, I have a new Cato paper out today on using the WTO to make China more market-oriented. Some of the main points are:

-- China's economic ambition is good. The world is better off with a wealthier China.

-- However, China does need to play by the rules that everyone else is playing by.

-- There is an assumption that China does not play by the rules, but when we looked at all the WTO complaints against China (41 at the time of writing), its compliance record is actually pretty good.

-- So one thing governments should start doing right away is bringing more WTO complaints against China. 4 possible areas are: general IP protection, trade secrets, forced tech transfer, subsidies. But with all the allegations against China, there are sure to be many other possible complaints as well.

-- In addition, there are gaps in the rules, and we should look to expand existing rules, eg, on state-owned enterprises.

-- In contrast to relying on the WTO, the Trump administration's approach is unilateral tariffs to push China to change. This approach makes it politically difficult for China to do so.

But here's the part I really wanted to run by readers of this blog. What do you think of this argument for an "adverse effects" SCM Agreement claim against certain Chinese subsidies?

... [SCM Agreement Article 5(b)] sets out a potentially broad, but mostly unexplored, type of actionable subsidy claim. There has been a long-standing GATT/WTO remedy for “nullification or impairment” that occurs even in the absence of a violation, generally referred to as a “non-violation” claim. These claims have a higher burden of proof, which makes them difficult to win, and they also have a weaker remedy, which makes winning them less valuable.69 However, by incorporating the nullification or impairment language into SCM Agreement Article 5(b), the WTO drafters may have given this remedy more teeth. There is little existing precedent for such claims, but the language is broad enough to make it worth exploring creative complaints under it.

As an example, China recently introduced tax exemptions and tax reductions for Chinese semiconductor producers, to last for a period of 10 years. For the first two to five years, the taxes will be eliminated completely.70 Subsequently, the taxes will be cut in half, through the 10th year.71

These tax exemptions and reductions clearly constitute “specific subsidies” under Articles 1 and 2 of the SCM Agreement, since they target a particular Chinese industry. The more difficult question is whether they cause “adverse effects to the interest of other Members” under Article 5. There is an argument that, because of their substantial size and the overall design of China’s policies in this sector, the tax exemptions and reductions given by China to its semiconductor industry cause adverse effects under Article 5(b).

According to footnote 12 to Article 5(b), nullification or impairment is “used in this Agreement in the same sense as it is used in the relevant provisions of GATT 1994, and the existence of such nullification or impairment shall be established in accordance with the practice of application of these provisions.” Where a measure is inconsistent with a provision of the GATT, Article XXIII:1(a) applies, and nullification or impairment is presumed. In addition, however, Article XXIII:1(b) gives rise to a cause of action when a member, through the application of a measure, has “nullified or impaired” “benefits” accruing to another Member, “whether or not that measure conflicts with the provisions” of the GATT 1994 (so-called non-violation complaints). The concept of nullification or impairment as an independent basis for a claim, even where there is no violation, has been elaborated in only a few GATT/WTO disputes. One panel offered detailed explanations, and the Appellate Body discussed the issues briefly, which can be summarized as follows.

The text of Article XXIII:1(b) establishes three elements that a complaining party must demonstrate in order to make out a claim under Article XXIII:1(b): (1) application of a measure; (2) a benefit accruing under the relevant agreement; and (3) nullification or impairment of the benefit as the result of the application of the measure.72

In the case of the Chinese tax exemptions and reductions, the application of the measure is clear and the benefits accrue on the basis of the tariff concessions made by China as part of its accession and through further commitments made under the recent Information Technology Agreement (ITA) expansion with regard to semiconductor products.73

The issue here is whether the semiconductor tax exemptions and reductions nullify or impair the benefits of China’s tariff concessions. There is a strong argument that this is the case, due to the fact that the competitive relationship between Chinese chipmakers and U.S. chipmakers has been upset by a very substantial subsidy.

Importantly, in order to prove an Article 5(b) adverse effects claim, there is no need to show lost sales. In this regard, the GATT EEC–Oilseeds I panel concluded: “In the framework of GATT, contracting parties seek tariff concessions. . . . The commitments they exchange in such negotiations are commitments on conditions of competition for trade, not on volumes of trade.”74 Instead of an effect on the volume of trade, a claim of “nullification or impairment” is based on “upsetting the competitive relationship” between domestic and imported products.75 Thus, in the present case, even though the immediate effects of the subsidy on trade flows between the United States and China are not known, the United States may still argue that its producers have been put at a competitive disadvantage relative to their Chinese competitors.

In this case, the benefits in question accrued to the United States on the date of China’s original tariff schedule taking effect after accession, and the date of the ITA expansion being incorporated into China’s schedule. The subsidy (i.e., the tax exemptions and reductions) was announced on March 30, 2018, and was to be effective from January 1, 2018. Since the tax exemptions and reductions were announced on a date subsequent to the tariff concession, the United States is entitled to rely on a presumption that it did not anticipate the introduction of the subsidy and its consequent upsetting of the expected competitive relationship between U.S. and Chinese chipmakers.76

Elaborating on this standard, in EEC–Oilseeds I, a GATT panel considered that nullification or impairment would arise when the effect of a tariff concession is “systematically offset by a subsidy programme”:

The Panel considered that the main value of a tariff concession is that it provides an assurance of better market access through improved price competition. Contracting parties negotiate tariff concessions primarily to obtain that advantage. They must therefore be assumed to base their tariff negotiations on the expectation that the price effect of the tariff concessions will not be systematically offset. If no right of redress were given to them in such a case they would be reluctant to make tariff concessions and the General Agreement would no longer be useful as a legal framework for incorporating the results of trade negotiations.77

This standard was reiterated by a WTO panel in the U.S.–Offset Act dispute: “This would suggest, therefore, that the EEC–Oilseeds panel considered that non-violation nullification or impairment would arise when the effect of a tariff concession is systematically offset or counteracted by a subsidy programme.”78

Examining the semiconductor tax exemptions and reductions under the standard of “systematic offsetting/counteracting” makes clear that the measure has caused nullification or impairment, for the following reasons.

First, the amount of subsidy provided is of great importance. Here the amount of subsidy is the amount of government revenue forgone, which is a complete rebate from a corporate income tax of 25 percent, for two to five years, covering a wide swath of semiconductor manufacturers, plus a 50 percent rebate from income tax through to the 10th year. This large tax rebate serves to completely undermine the promise of lower tariffs, which was a substantial concession that could have been of great benefit to foreign producers, and indicates that the subsidy is counteracting the competitive benefit accruing to the United States under China’s promises.

The U.S. semiconductor industry is the leading global provider of semiconductors and semiconductor manufacturing equipment, accounting for 50 percent and 47 percent shares of the world market, respectively. More than 80 percent of U.S. production is exported, with China its biggest export market. Moreover, China’s growing demand for semiconductors is met mainly by imports, including 56.2 percent from the United States.79 These trade figures make it clear that the United States will be hit hard and put at a competitive disadvantage by these Chinese subsidies relative to what it enjoyed previously. Any competitive edge that U.S. chipmakers had because of tariff reductions on their exports to China will be offset by the Chinese grant of subsidies in the form of tax breaks to domestic Chinese chipmakers.

Secondly, the systematic nature of the Chinese measures can be seen through the broader context of the measure. The Chinese government, motivated by economic and national security goals, has publicly asserted its desire to build a semiconductor industry that is far more advanced than today’s and less reliant on the rest of the world.80 The strategy aims at making China the world’s leader in Integrated Circuit (IC) manufacturing by 2030.81 Therefore, the intention of the Chinese government is clear: it wants to promote domestic production, either for domestic use or export.

Thirdly, the effect of the tax exemptions on U.S. manufacturers must be viewed in light of China’s broader strategy. The stated aim of Chinese policy is for China to be at an “advanced world-level [semiconductor capability] in all major segments of the industry by 2030.”82 China has set goals to promote its IC sectors and is supplementing these specific policies with a series of complementary policies that are applied across the IC sector. According to public reports, it places conditions on access to its market to drive localization and technology transfer.83 All these measures taken together have the potential to (1) force the creation of market demand for China’s indigenous semiconductor products; (2) gradually restrict or block market access for foreign semiconductor products as competing domestic products emerge; (3) force the transfer of technology; and (4) grow non-market-based domestic capacity, thereby disrupting the global semiconductor value chain.

Summing up, while China promised to reduce semiconductor tariffs as part of its accession and under the ITA, and has therefore made commitments under Article II benefiting its trading partners, including the United States, it has nullified or impaired those benefits through the use of specific subsidies, resulting in adverse effects under SCM Agreement Article 5(b).

]]>Simon LesterThu, 15 Nov 2018 11:18:30 -0500https://worldtradelaw.typepad.com/ielpblog/2018/11/more-wto-complaints-against-china-including-an-adverse-effects-nullification-or-impairment-claim.htmlMore on How to Determine Whether a Measure is a Safeguard Measurehttp://feedproxy.google.com/~r/ielpblog/~3/iAc5VDY4sf8/more-on-how-to-determine-whether-a-measure-is-a-safeguard-measure.html
https://worldtradelaw.typepad.com/ielpblog/2018/11/more-on-how-to-determine-whether-a-measure-is-a-safeguard-measure.htmlIn the India - Iron and Steel Products panel report circulated last Wednesday, the panel explained that it would consider the question of whether the measure at issue is a safeguard measure: 7.30. In this dispute, most of the claims...In the India - Iron and Steel Products panel report circulated last Wednesday, the panel explained that it would consider the question of whether the measure at issue is a safeguard measure:

7.30. In this dispute, most of the claims have been raised by Japan under Article XIX of the GATT 1994 and under different provisions of the Agreement on Safeguards. The parties have not questioned the applicability of Article XIX of the GATT 1994 or the Agreement on Safeguards to the dispute. Indeed, both parties agree that the challenged measure is a safeguard within the meaning of Article XIX:1(a) of the GATT 1994 and the Agreement on Safeguards.74 However, given the facts before us and the arguments made by the parties and third parties in this proceeding75, we consider it appropriate to examine whether the measure at issue falls within the scope of the Agreement on Safeguards and Article XIX of the GATT 1994, before addressing the merits of Japan's claims.

The panel later offered the following reasoning in support of its finding that the measure constitutes a safeguard measure:

7.75. We have already noted that the manner in which a Member's domestic law characterizes its own measures is not dispositive of the characterization of such measures under WTO law. Likewise, the manner in which a Member conducts an investigation or notifies measures to the WTO is not dispositive of the legal characterization of the measure. However, all these factors may be relevant elements when considering a measure's design and structure. In this regard, we find that the following elements confirm our conclusion. First, the fact that the Indian competent authority imposed the measure at issue and conducted the respective investigation under domestic legislation that authorizes the Government to impose duties on imports after determining that relevant products are being imported into India in increased quantities and under conditions so as to cause or threaten to cause serious injury to the domestic industry. Second, the fact that the measure at issue had the typical characteristics of a safeguard measure, including (i) that it resulted in duties imposed on imports of the like or directly competitive product to that produced by the affected domestic industry; (ii) that the duties were only temporary; (iii) that the measure was subject to a progressive liberalization at periodic intervals; and (iv) that imports from certain developing countries that did not exceed a threshold were exempted from the duties. Third, the fact that India notified this investigation and measures to the WTO Committee on Safeguards pursuant to the provisions in Article XIX of the GATT 1994 and in the Agreement on Safeguards.

This reasoning offers some guidance as to how to approach the question of whether the U.S. Section 232 tariffs are safeguard measures, as claimed by the governments imposing retaliatory tariffs in response to the Section 232 tariffs. Let's go through each of the three elements the panel mentioned, to see how they would apply in the case of the Section 232 tariffs:

1. The first element is whether the competent authority "imposed the measure at issue and conducted the respective investigation under domestic legislation that authorizes the Government to impose duties on imports after determining that relevant products are being imported into India in increased quantities and under conditions so as to cause or threaten to cause serious injury to the domestic industry." That was not the case with the Section 232 tariffs, as, among other things, Section 232 does not look at serious injury (the standard under Section 232 is somewhat analogous, but it's clearly different).

2. On the second element, there are four sub-elements, 3 of which suggest that the Section 232 tariffs are not safeguard measures. While the duties are imposed on like imported products, they are not temporary (as far as we can tell at the moment), they are not subject to progressive liberalization at periodic intervals, and they do not exempt developing countries below a threshold.

3. And as for the third element, the United States did not notify the Section 232 investigation and measures to the WTO as safeguard measures.

]]>Simon LesterSun, 11 Nov 2018 09:05:25 -0500https://worldtradelaw.typepad.com/ielpblog/2018/11/more-on-how-to-determine-whether-a-measure-is-a-safeguard-measure.htmlInvestment Arbitration Workshop in Oslohttp://feedproxy.google.com/~r/ielpblog/~3/SqoX34A77Xc/investment-arbitration-workshop-in-oslo.html
https://worldtradelaw.typepad.com/ielpblog/2018/11/investment-arbitration-workshop-in-oslo.htmlThe folks at Pluricourts asked me to post the following: Reforming International Investment Arbitration Workshop 1-2 February 2019 Call for papers: The ISDS Academic Forum, together with PluriCourts Centre for Excellence (LEGINVEST) and Forum for Law & Social Science at...The folks at Pluricourts asked me to post the following:

Malcolm Langford, Professor of Public Law & Affiliate, Pluricourts, University of Oslo

Daniel Behn, Associate Professor, Pluricourts, University of Oslo and Lecturer, University of Liverpool

]]>Simon LesterSun, 11 Nov 2018 08:56:27 -0500https://worldtradelaw.typepad.com/ielpblog/2018/11/investment-arbitration-workshop-in-oslo.htmlUNCITRAL and ISDS Reforms: Moving to Reform Options … the Politicshttp://feedproxy.google.com/~r/ielpblog/~3/nZXwFf_mrO8/uncitral-and-isds-reforms-moving-to-reform-options-the-politics.html
https://worldtradelaw.typepad.com/ielpblog/2018/11/uncitral-and-isds-reforms-moving-to-reform-options-the-politics.htmlFirst published on EJIL: Talk! In the last blog, I provided an update on the UNCITRAL process, including the consensus decision from Vienna last week to move forward to consider possible reforms of investor-state arbitration. This decision is very significant....First published on EJIL: Talk!

In the last blog, I provided an update on the UNCITRAL process, including the consensus decision from Vienna last week to move forward to consider possible reforms of investor-state arbitration. This decision is very significant. But to get a sense of how this decision was reached and where the process might be heading, I thought it would be helpful to provide my sense of the politics of the process as well as some projections about how it might move forward.

As stated previously, I am a member of the Australian delegation but I am included in that delegation in my independent academic capacity, so nothing in my writings or talks should be taken to reflect Australia’s views. My academic views are exactly that: mine and academic. Nevertheless, I hope that these views are informed. These blogs are based on official interventions during the UNCITRAL plenary sessions as well as discussions with a diverse range of actors from the process.

1. Politics

Let me start with some of the politics and atmospherics. I focus here, as previously, largely on the states, leaving for others to chart the role of the non-state actors.

One reason that states agreed to consider ISDS reforms at UNCITRAL was that it was a multilateral forum that permitted wide participation by states and other interested actors. UNCITRAL has certainly delivered on this score. Over 400 delegates registered for the meeting in Vienna. Importantly, a significant number of new states from the developing world, particularly Africa, joined the meeting for the first time. This was partly due to the UNCITRAL travel fund, newly replenished courtesy of the European Union and Switzerland. It was also because of the active role of NGOs in seeking to encourage attendance by these states.

The old camps of incrementalists and systemic reformerswere evident once again. However, some divisions could also be detected within the established camps, at least with respect to tone and strategy. For instance, Mauritius was forceful, explicit and keen to get states to declare their hands as incremental or systemic reformers, whereas the European Union was more restrained and patient and made no moves to divide the room in this way. Japan made points early and late in the week on process, much more so than the United States and Chile, leading to the perception by some that it was “filibustering.” Canada seemed supportive of multilateral reform options, but also took the time to note some of the positive developments in the CPTPP.

Some states did not speak often, but still made significant interventions. For instance, on day one, China proposed the plan that the Chair ultimately adopted in calling for states to put forward proposals on the next steps in the work plan before the New York meeting. China also reiterated its view that inconsistency and incorrectness were problems in the system and that the existing mechanisms of review (annulment and judicial review) were inadequate. But it took a more measured approach on the concerns raised about arbitral appointments, indicating that it didn’t necessarily believe there was a problem with the party appointment mechanism itself. This might indicate that China is warming up to a position of supporting ISDS, with possible improvements, but subject to an Appellate Body.

South Africa did not speak much but clearly indicated that some of the concerns raised required at least systemic reform (using that word for the first time) and, importantly, that procedural reforms were not enough. According to South Africa, states needed to take holistic approaches on both procedural and substantive reforms in order to gear investment protection to the ultimate goal of sustainable development. Brazil reiterated its approach of rejecting investor-state arbitration in favour of state-to-state arbitration. These paradigmatic reformersseem to be content with leading by example and do not appear to be coordinating. They are following the process without actively trying to develop their own followers.

A number of states were more active this time around than previously, including Cameroon, Cote D’Ivoire, Dominican Republic, Egypt, Indonesia, Iran, Kenya, Korea, Germany, Morocco, the Netherlands, Thailand, and Vietnam, with most if not all calling for reforms. By contrast, Russia was much less vocal than previously, saying nothing on issues like inconsistency, though affirming again the importance of party appointment. This prompted speculation by some about whether its approach had softened. Other important states were silent despite considerable experience with the system, including most notably India.

2. Projections

Projecting forward is always hard and not always reliable. Despite this, let me give you my best guess of where the politics of this is going.

First, there seemed to be clear momentum in the room for considering some sort of systemic reform, so I find it hard to imagine that a Multilateral Investment Court and/or Appellate Body won’t be one of the reforms being considered in New York. The bigger question to me is whether some of the states that are less keen on this multilateral solution will propose working on other options, such as a range of incremental reforms like developing a code of conduct or putting together a series of “best practices” on issues like multiple proceedings, non-disputing party submissions and frivolous claims.

Second, if a range of reforms were to be considered, I doubt that there would be a consensus agreement to consider the incremental options first. Some states might say that it would be logical to start with smaller and more universally agreed upon reforms (like a code of conduct) before moving onto larger and more controversial options (like a court). But delegations that want more systemic reform – which I expect will be a majority – are unlikely to sit by patiently while incremental reforms are discussed given that states could take years to work through these options. This conclusion is particularly so as some states view the incremental option as being strategically used to delay consideration of multilateral reforms.

It might be possible to consider an “a la carte” range of incremental and systemic reforms in the format of an opt-in Mauritius-style convention. Any given reform would apply only if both parties to an investment treaty had opted into that reform (a “Tinder Treaty”). But if the Working Group were to agree to consider a range of reforms – which is an “if” – it seems to me that that would be only if it also agreed to consider these on a concurrent basis. Different reforms could potentially be considered by different sub-groups within Working Group III or possibly even different working groups. For instance, Working Group II could perhaps work on a code of conduct while Working Group III worked on a standing body. Some incremental reforms might also be worked on in conjunction with other bodies, such as ICSID and the PCA.

Third, it is possible that a state or series of states might put in a proposal to work on an Appellate Body without also working on the two-tiered Multilateral Investment Court. There was general agreement by states in the room that inconsistency and lack of a procedure to ensure correctness was a problem requiring reform. On arbitral appointments, however, many states recognized that there were problems in the system (e.g., perceptions or realities of pro-investor and pro-state bias, lack of diversity and perverse incentives), but a significant number also raised the importance of parties getting to select their own arbitrators. Yet no state has emerged to champion a stand-alone Appellate Body so far.

I would not be surprised if more states ultimately end up being in favour of an Appellate Body than a two-tiered Multilateral Investment Court. That being said, some states might ultimately conclude that they cannot adequately address issues like independence, impartiality and diversity while keeping party appointments. In this regard, Pluricourts provided what one delegation exclaimed were “head-turning” statistics, such as that women account for only 9% of arbitral appointments, that 86% of these go to just two “formidable women,” and that the rate of improvement is so small that women would not be set to achieve 25% representation until 2100 and parity in 10,000. Regional diversity statistics also troubled many delegations.

The European Union is unlikely to give up easily on its two-tier solution given its belief in reform and the toxicity of “private justice” in some of its domestic settings. One option would be to try to get agreement on considering an Appellate Body first and a Court second. But if you want an integrated system at the end, this seems far from ideal. Probably a better move would be to consider both at the same time but with a flexible open-architecture structurethat allowed states to sign onto either the first level court and/or the appellate mechanism. That would permit a larger body of states to agree to some level of systemic reform, with each one selecting the reforms that best suited their needs coupled with a Tinder-style matching approach.

Finally, there may be debates about what counts as “systemic” or “multilateral” reform. Some states might propose that the Working Group needs to first identify some of the best practices that have been adopted in recent treaties (e.g., the CPTPP) and other reform processes (e.g., the ICSID Rules), then assess whether these practices have been successful in addressing some or all of the identified concerns, then consider whether these practices could provide multilateral or systemic reform through a Mauritius-style convention, and only then identify whether additional systemic reforms might be needed to address remaining concerns. I expect that many delegations in the room would view such a proposal as a delay tactic, even if they considered some of the recent innovations to be worth pursuing in their bilateral approaches.

* * *

Although states were not meant to debate potential reforms in Phases 1 and 2, “different solutions lurked in the room like elephants, often seeming to inform the positions taken by various delegations on whether particular issues.” When attempts were made to talk about Phase 3 reforms during the plenary sessions, many actors were quick to shut them down in order to follow the carefully sequenced mandate. During that first session in Vienna, I recall circulating this cartoon to some colleagues as it seemed to be clear that the EU’s Multilateral Investment Court proposal was the elephant in the room.

By the time we get to New York, I expect that the elephant proposal will have formally entered the room, though at a high level of generality. Whether or not UNCITRAL ultimately decides to move forward with focusing on a single reform or a suite of reforms, it is going to have to start somewhere. Hence New York is likely to be a menu planning session. And, as one non-state delegation stated during the week, “How do you eat an elephant? One bite at a time.” I think that I know what the main course will be. It will be interesting to see if it comes with any appetizers or side dishes.

]]>Anthea RobertsThu, 08 Nov 2018 13:02:18 -0500https://worldtradelaw.typepad.com/ielpblog/2018/11/uncitral-and-isds-reforms-moving-to-reform-options-the-politics.htmlUNCITRAL and ISDS Reforms: Moving to Reform Options … the Processhttp://feedproxy.google.com/~r/ielpblog/~3/Aq5jsflVNx8/uncitral-and-isds-reforms-moving-to-reform-options-the-process.html
https://worldtradelaw.typepad.com/ielpblog/2018/11/uncitral-and-isds-reforms-moving-to-reform-options-the-process.htmlFirst published on EJIL Talk! Last week has been described as a watershed moment for ISDS reform. During a meeting in Vienna, states decided by consensus on the desirability of developing reforms in UNCITRAL with respect to investor-state arbitration. States...

First published on EJIL Talk!

Last week has been described as a watershed moment for ISDS reform. During a meeting in Vienna, states decided by consensus on the desirability of developing reforms in UNCITRAL with respect to investor-state arbitration. States now have an opportunity to make proposals for a work plan about what reforms to consider and how to go about considering them. To the extent that the tide has turned on traditional investor-state arbitration, it is now up to states to tell us where they want to sail.

As you might imagine, reaching a decision like this involved quite a process, along with a lot of politics. In this blog, I set out the process in terms of what was decided in Vienna, what was not decided, and what the next steps will be for moving forward in 2019. In the next blog, I will provide some context to this development, giving some insights into the politics of the process as well as some projections about how this process might develop.

This reform process will be long and its ultimate outcome remains unknowable. But the momentum for and direction of reforms are becoming increasingly clear. The calls for systemic reform are rising, though different states may mean different things by “systemic.”

1. How did we get here?

In response to deep controversy about the legitimacy of investor-state arbitration, the Member States of UNCITRAL granted Working Group III a mandatein July 2017 to: (i) identify and consider concerns regarding ISDS; (ii) consider whether reform was desirable in light of any identified concerns; and (iii) if the Working Group were to conclude that reform was desirable, develop any relevant solutions to be recommended to the Commission.

The mandate calls for the process to be “fully transparent” and thus recordings of the session are available online. These posts are in keeping with that call for transparency. I am a member of the Australian delegation but I am included in that delegation in my independent academic capacity, so nothing in my writings or talks should be taken to reflect Australia’s views. I was unable to attend the meetings in Vienna, but these blogs are based on the official interventions during the plenary sessions as well as discussions with a diverse range of actors in the process.

In 2017-2018, the Working Group largely completed Phase 1 outlining numerous concerns with the system, including with respect to inconsistency and correctness, arbitral appointments, and costs and duration. However, the Chair has noted on numerous occasions that states can still raise additional concerns under Phase 1 if they wish, which is particularly important as additional states join the process. Following the last session in New York, the Secretariat completed working paperson these concerns that formed the basis for discussions in Vienna last week on Phase 2.

2. What Was Decided

The Working Group moved through Phase 2 relatively swiftly and without significant controversy. The group agreed by consensus that it was desirable to consider reforms with regard to: (1) arbitral outcomes, including concerns relating to consistency, coherence, and correctness of arbitral interpretations; (2) arbitrators, including concerns relating to independence, impartiality, conflicts of interest, and diversity; and (3) costs and duration, including concerns relating to length, cost recovery and frivolous claims. The decision was pitched at such a high level of generality that it would have been hard for states not to reach consensus on this issue given the concerns raised in Phase 1.

A few issues from Phase 2 were held over to be discussed first in New York. For instance, the Secretariat had not yet completed its report on third party funding, so discussion on that issue was reserved until the start of the next session. States were invited to write in to UNCITRAL about other issues that should be considered. China mentioned that it might have views to share in New York on conciliation, for example. However, Phase 2 considerations of most issues were completed in Vienna and on these a decision was made to develop a work plan for Phase 3. Significantly, no effort was made to prevent a decision to move forward from being taken before Phase 2 was completed in its entirety.

As the discussion in Vienna was limited to Phase 2, states did not have to outline any proposed reforms or their views on different options, so any comments on specific reforms made should be treated as provisional, though they may point the finger toward the future.

3. What Was Not Decided

Two key issues about Phase 3 remain to be resolved in New York. The first is which reform or reforms the Working Group should consider in order to address some or all of the concerns previously identified in Phase 2. The second is what work plan UNCITRAL should adopt considering issues such as sequencing, priority, multi-tracking, coordination with other organizations and ways to continue working between Working Group sessions.

On the first issue, there seems to be significant momentum in the room for considering some form of systemic reform. The European Union, its Member States and states like Canada and Mauritius were of course supporting this course of action. But a diverse – and growing – number of other states (including Argentina, Morocco and Pakistan) also lent their weight to the idea that the concerns identified in Phase 1 were real and systemic reform was needed. Of course, different states can mean different things by “systemic” reform, so this only tells us so much. But the general sense of the week was that calls for some form of systemic reform were getting louder and, importantly, were being made by a more diverse group of states.

There were also voices in the room, including the United States, Chile, Japan and to some extent Australia, Israel and Mexico, cautioning that states should take a balanced approach to the concerns identified in Phase 1 (e.g., inconsistencies had been identified, but were they all really unjustified?) and/or that some of these issues might be adequately addressed through adopting some innovations from recent treaties or other reform efforts. In particular, provisions from the CPTPP and KORUS were highlighted by multiple states, including on issues such as a code of conduct for arbitrators, rules on multiple proceedings, early dismissal of frivolous claims, non-disputing party submissions and a procedure for joint interpretations. Reforms to the ICSID Rules also received numerous favourable mentions.

What was not decided was whether UNCITRAL would focus on one reform option or multiple reform options and what that option or those options would be. This unresolved first point has implications for the second undecided issue: what work plan should the Group adopt to develop and evaluate reform options? This second question is important even if a single reform is considered. For instance, if a draft Multilateral Investment Court were to be prepared for consideration in the Working Group, how would that be done? Would it be prepared by states, the Secretariat or an expert group?

But this second issue becomes crucial (and highly political) if multiple reforms are considered. If UNCITRAL decides to consider a range of more incremental and more systemic reforms, how will it go about doing that? For example, would it take a sequential approach and, if so, on which reform will it start? Would it take a concurrent approach and, if so, will different sub-groups or Working Groups take the lead on different reform proposals? How might UNCITRAL work with other institutions (like ICSID, the PCA, UNCTAD and the OECD) to leverage rather than duplicate work?

4. Next Steps

As the mandate originally made clear, this is a government-led process. That is a point that the Chair returned to at the end of the week when he invited states to make submissions ahead of New York about UNCITRAL’s work plan, addressing substantive issues such as which reforms should be addressed and procedural issues such as sequencing, multi-tracking, priority and coordination. These submissions are due in mid-January.

At this point in the process, the Chair and Secretariat seemed to consciously step back and invite the states to step forward. Behind the scenes, and in some cases during the plenary sessions, a number of states had been suggesting this state-led approach. There had also been some controversy about the Secretariat having listed potential reform options and their relationship to different concerns in the working papers ahead of this meeting.

The meeting in New York will be important as key procedural markers for the reform process will be set down and these are likely to have important substantive implications. But I would not expect there to be any substantive progress on the reforms themselves. In 2017, I said that “Change is coming; it is just a question of what change will occur and when and how it will transpire.” We still do not know what that change will be, but we will soon have a better sense of when and how it will transpire.

]]>Anthea RobertsWed, 07 Nov 2018 13:16:10 -0500https://worldtradelaw.typepad.com/ielpblog/2018/11/uncitral-and-isds-reforms-moving-to-reform-options-the-process.htmlA Watershed Moment for ISDS Reformhttp://feedproxy.google.com/~r/ielpblog/~3/gTpyeXyTNAg/a-watershed-moment-for-isds-reform.html
https://worldtradelaw.typepad.com/ielpblog/2018/11/a-watershed-moment-for-isds-reform.htmlLast week marked a watershed moment for the movement to reform investor-state dispute settlement (ISDS). Meeting in Vienna, Delegations to the United Nations Commission on International Trade Law (UNCITRAL) Working Group III (WGIII) agreed to work multilaterally to reform the...Last week marked a watershed moment for the movement to reform investor-state dispute settlement (ISDS). Meeting in Vienna, Delegations to the United Nations Commission on International Trade Law (UNCITRAL) Working Group III (WGIII) agreed to work multilaterally to reform the resolution of investment disputes. Delegations agreed to focus on responding to key systemic concerns with ISDS, as identified in WGIII’s two previous sessions.[i]

WGIII began its work on ISDS in Vienna last year, at its 34th Session. From the start, Delegations divided the process into three broad phases: identifying concerns about ISDS (Phase I); deciding which concerns, if any, were ripe for multilateral reform in UNCITRAL (Phase II); and designing options for reforms responding to any such concerns (Phase III). Phases I and II would be of prime importance in setting the frame. Though additional concerns can always be raised, any agenda for reform would be largely grounded in the problems identified in these early meetings. WGIII began its work identifying concerns with ISDS in 2017, and essentially concluded Phase I at its 35th Session in New York last Spring. By the end of that meeting, WGIII had identified a range of procedural and structural concerns with ISDS, relating to: (1) fragmented arbitral outcomes; (2) the arbitrators charged with adjudicating disputes; (3) matters of duration and cost; and (4) third-party funding.

The Working Group concluded Phase II last week, in its 36th session in Vienna, finding that these concerns about ISDS were serious enough to merit reform, and agreeing to pursue reforms multilaterally. The turn to Phase III opens the door to the most dramatic opportunity for thinking through multilateral and systemic reforms to ISDS in a generation – arguably since its inception. WGIII will begin debating questions of form and design at its 37th Session in New York next Spring. Before then, Delegations will surely circulate diverse reform proposals. Options discussed thus far have ranged from soft law, to incremental treaty-based reform, to more transformative institutional reforms – including establishing an Appellate Mechanism, a standing Appellate Body, or the Multilateral Investment Court championed by the European Union.[ii]

The reform process is thus at an inflection point. All options are formally on the table. Yet it should be understood that the future of the process will be shaped by its beginning. The agenda for reform within UNCITRAL will be largely framed by the concerns that WGIII has identified in its first three sessions. Though subject to future additions, the package of concerns identified thus far will largely channel the reform debate to come, and delimit its scope. It is thus crucial to be clear about what exactly was decided in Phases I and II.

With respect to arbitral outcomes, the Working Group decided to address concerns about consistency, coherence, and correctness of arbitral interpretations, all of which affect predictability for States and investors in their interactions ex ante. For WGIII, this means considering reforms to those features of ISDS that enable and exacerbate such problems. These include both the limits of current mechanisms to correct inconsistency and incorrectness in arbitral case law (e.g. no systematic mechanism for appeal), as well as the lack of a framework to address multiple claims arising out of the same injury (including the possibility of shareholder claims for reflective loss, and parallel treaty and contract claims).[iii]

With respect to the arbitrators, Delegations expressed concerns relating to independence, impartiality, conflicts of interest, and diversity. In this vein, WGIII decided to consider reforms to institutional features of ISDS relating to arbitrator selection (especially party appointment of arbitrators); party remuneration of arbitrators; and possibilities of issue-conflict and double-hatting (where the same individuals serve as arbitrators in some disputes, and as counsel in other potentially related disputes).

Finally, with respect to costs, WGIII determined that reforms were desirable to redress the excessive length of ISDS disputes, the difficulty in recovering costs awards against investors (including the need for rules on security for costs), and the lack of a mechanism to address frivolous or unmeritorious claims. Previously WGIII had also identified concerns related to third party funding, but deferred deciding whether to place these matters on the reform agenda until its 37th Session in New York (2019).

Together these concerns make up the agenda for Phase III. At present there is no roadmap for how to reform ISDS – only a decision to pursue reforms multilaterally through UNCITRAL. From the discussions in WGIII thus far, it is at least clear that there will be dramatic differences among member Delegations about how far to go. Some are pushing for incrementalism (like Chile, Japan, and the U.S.). Others are openly advocating for a full-blown multilateral investment court (including E.U. Member States, Canada, and Mauritius). And many remain in between or undeclared.[iv] Nothing is yet decided, and formally, at least, all options are on the table.

Still, the agenda itself will frame the process going forward. It thus behooves anyone following WGIII’s progress to ask where the concerns identified thus far point us. Though there is no single unifying theme tying together the concerns on the agenda, there are clear leitmotifs. ISDS’ lack of systematicity, uniformity, and unpredictability all loom large – implicated by interpretive inconsistency as well as the lack of arbitral ethical standards, and the limits to mechanisms for resolving arbitrator conflicts of interest or streamlining matters of cost.

As we turn to Phase III, the question will be how to calibrate reforms to these specific kinds of concerns. Will soft law standards be deemed sufficient? Or will larger-scale institutional mechanisms ultimately appear necessary? In the event, we can be sure that there will be schisms among Delegations in the room. But from where I sit, the agenda decided in Vienna points toward systemic reform.

[i] I have had the privilege of participating in WGIII’s discussions as an Observer Delegate with the American Society of International Law.

[iii] For a more fulsome discussion of the problems of shareholder reflective loss and the treaty/contract problem, see Julian Arato, The Private Law Critique of International Investment Law, 113 Am. J. Int’l L. ___ (forthcoming 2019), available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3246425; David Gaukrodger, “Investment Treaties and Shareholder Claims for Reflective Loss: Insights from Advanced Systems of Corporate Law”, OECD Working Papers on International Investment, 2014/02, OECD Publishing (2014), available at https://dx.doi.org/10.1787/5jz0xvgngmr3-en.

]]>Economic IntegrationInvestor-State ArbitrationJulian AratoSun, 04 Nov 2018 21:57:16 -0500https://worldtradelaw.typepad.com/ielpblog/2018/11/a-watershed-moment-for-isds-reform.htmlThe Problem of Insufficient Notificationshttp://feedproxy.google.com/~r/ielpblog/~3/cC5sWztPZmc/the-problem-of-insufficient-notifications.html
https://worldtradelaw.typepad.com/ielpblog/2018/11/the-problem-of-insufficient-notifications.htmlLast year, I mentioned a U.S. proposal on WTO notifications. It looks like the U.S. now has a few others on board: PROCEDURES TO ENHANCE TRANSPARENCY AND STRENGTHEN NOTIFICATION REQUIREMENTS UNDER WTO AGREEMENTS COMMUNICATION FROM ARGENTINA, COSTA RICA, THE EUROPEAN...Last year, I mentioned a U.S. proposal on WTO notifications. It looks like the U.S. now has a few others on board:

Recognizing that transparency and notification requirements constitute fundamental elements of many WTO agreements and a properly functioning WTO system, and thus of Members' obligations;

Acknowledging the chronic low level of compliance with existing notification requirements under many WTO agreements; and

Desiring to strengthen and enhance transparency and improve the operation and effectiveness of notification requirements;

Decides:

General

1. To reaffirm existing notification obligations and recommit to providing complete and timely notifications under the WTO Agreements within the remit of the Council for Trade in Goods, for which there is regular annual reporting provided by the Secretariat (G/L/223/Rev.24 and its revisions), including the:

(a) Agreement on Agriculture

(b) Agreement on Implementation of Article VI of the GATT 1994 (Anti-Dumping)

Agreement on Subsidies and Countervailing Measures

Agreement on Safeguards

Understanding on the Interpretation of Article XVII of the GATT 1994 (State Trading)

Agreement on Implementation of Article VII of the GATT 1994 (Customs Valuation)

2. To instruct appropriate committees, working groups or other bodies, such as the Working Group on Notification Obligations and Procedures (Working Group), to assess and report annually to their designated supervisory bodies on Members' compliance with notification obligations under the agreements listed in paragraph 1, take appropriate steps to reinforce compliance with the notification requirements under such agreements (for example, by carrying out notification workshops), and to make recommendations, as appropriate, on means by which greater compliance can be encouraged and achieved.

3. To instruct the Working Group to meet before [x date] to develop recommendations on improving Member compliance with notification obligations under the agreements listed in paragraph 1. The Working Group will consult with appropriate committees, other working groups and bodies as appropriate, and consider both systemic and specific improvements that can help Members improve compliance with notification obligations. The Working Group will also consult with the WTO Secretariat as appropriate, including the WTO Institute for Training and Technical Cooperation (ITTC) to assess the contribution of WTO trade-related technical assistance to improving notification compliance, as well as the Central Registry of Notifications. The Working Group will report to the Council for Trade in Goods on its findings before [x date], and provide updates at each subsequent meeting.

4. In light of the particular importance Members attach to the WTO's work to reform agriculture, and in order to strengthen and enhance the effectiveness of the review process of the implementation of commitments in the Agreement on Agriculture, the Committee on Agriculture is requested to review and update its Notification Requirements and Formats ( G/AG/2 ), taking into account recommendations made by the Working Group and other bodies described in paragraphs 2 and 3.

5. To instruct the Working Group to work with the Secretariat to update the Technical Cooperation Handbook on Notifications ( WT/TC/NOTIF/INF/3 ) and present it to the Council for Trade in Goods for its [x date] meeting.

6. To instruct the Trade Policy Review Body to ensure that beginning in 2019 all trade policy reviews include a specific, standardized focus on the Member's compliance with its notification obligations under the agreements listed in paragraph 1.

7. At any time, Members are encouraged to provide a counter notification of another Member concerning notification obligations under the agreements listed in paragraph 1.

8. That beginning in [x date], a Member that fails to provide a required notification under an agreement listed in:

(a) paragraph 1(a) within [720 days] [2 years] following the year that a notification is required by the Committee on Agriculture's Notification Requirements and Formats ( G/AG/2 ) or has failed to provide any prior required notification, that Member is encouraged to submit to the Committee on Agriculture by [x date] of each subsequent year an explanation for the delay, the anticipated time-frame for its notification, and any elements of a partial notification that a Member can produce to limit any delay in transparency;

(b) paragraph 1(b) by the relevant deadline or has failed to provide any prior required notification is encouraged to submit to the relevant committee by [x date] and by [x date] of each subsequent year an explanation for the delay, the anticipated time-frame for its notification, and any elements of a partial notification that a Member can produce to limit any delay in transparency; and

(c) paragraph (1a) as far as ad hoc notifications are concerned, the Member shall follow current practice under G/AG/2 .

9. A developing country Member encountering difficulties to fulfil notification obligations or the information required under paragraph 8 is encouraged to request assistance and support for capacity building from the Secretariat, either in the form of WTO trade-related technical assistance or as ad hoc-assistance for a particular notification. The Secretariat shall advise Members on the most appropriate assistance available.

10. Each developing country Member is encouraged to submit to the relevant committee and to the Working Group by [x date] and by [x date] of each subsequent year information on those notifications under the agreements listed in paragraph 1 that it has not submitted due to a lack of capacity, including information on the assistance and support for capacity building that the Member requires in order to submit complete notifications.

11. If a Member fails to provide a complete notification within one year of the deadline set out in paragraph 8(a) or (b), the Member may request that the Secretariat assist the Member in researching the matter and, in full consultation with the relevant Member, and only with the approval of that Member, provide a notification on its behalf.

12. For an agreement listed in paragraph 1, if a Member fails to provide a complete notification within one year of the deadline set out in paragraph 8(a) or (b) and that Member has not requested assistance from the Secretariat identified in paragraph 9 or if such assistance is requested but the Member has not cooperated with the Secretariat, the following administrative measures shall apply to that Member:

(a) After one but less than two full years from a notification deadline, the following measures shall be applied to the Member at the beginning of the second year:

(i) representatives of the Member cannot be nominated to preside over WTO bodies;

(ii) questions posed by the Member to another Member during a Trade Policy Review need not be answered;

(iii) the Member will be assessed a supplement of [x][5] percent on its normal assessed contribution to the WTO budget, to be effective in the following biennial budget cycle;

(iv) the Secretariat will report annually to the Council for Trade in Goods on the status of the Member's notifications; and

(v) the Member will be subject to specific reporting at the General Council meetings.

(b) After two but less than three full years following a notification deadline, the following measures shall be applied to the Member at the beginning of the third year, in addition to the measures in subparagraph (a):

(i) the Member will be designated as an Inactive Member;

(ii) representatives of the Member will be called upon in WTO formal meetings after all other Members have taken the floor, and before any observers; and

(iii) when the Inactive Member takes the floor in the General Council it will be identified as such.

(c) The administrative measures identified in paragraph 12(a) and 12(b) shall not apply to Members that have submitted information on the assistance and support for capacity building that the Member requires, as set out in paragraph 10.

...

Here are some questions and comments that come to mind:

1) How big a problem is this? Which countries would be affected most? If this is all about China, how hard will it be for China to comply? Is it likely to do so? My Cato colleague Huan Zhu translated a Chinese news report about this issue as follows:

The Ministry of Commerce held a press conference today. A reporter asked: On April 6, the United States stated before the WTO that the first local government subsidy notification that China submitted to the WTO is incomplete, and there are many export subsidy programs in violation of the WTO SCM Agreement. For instance, China did not report its local subsidies for steel, aluminum and fisheries. What is MOFCOM's response?

Sun Jiwen, Spokesperson for the Ministry of Commerce, responded that Chinese government has held the transparency of its trade policy to be of great importance since its accession to the WTO. In July 2016, the Chinese government, in accordance with relevant rules, submitted the notification of local subsidies from 2001 to 2014, covering 100 local subsidy programs in 19 provinces and 3 cities under separate state planning. China has fulfilled its obligations in good faith, and has received positive feedback from other WTO Members.

Sun Jiwen pointed out that WTO Members would determine the content and scope of the subsidy notification based on their own understanding of the relevant rules. Because of the different understandings, Members would have different views on the thoroughness of the notification. In addition, in order to effectively fulfill its transparency obligation, China has included the export subsidies that were granted, but have been abolished or terminated, in the notification of local subsidies to the WTO.

2) SCM Agreement Article 25.2 says: "Members shall notify any subsidy as defined in paragraph 1 of Article 1, which is specificwithin the meaning of Article 2, granted or maintained within their territories." If there is evidence that some subsidies are not being properly notified, why haven't there been disputes initiated over this?

3) What actual impact does all of this have on trade? And how does its impact compare to other things WTO Members might do, such as liberalizing trade in services or committing to reduce agriculture subsidies?

4) Will this group of countries be able to get the rest of the membership on board with their approach?

5) This seems like an expansion of the role of the Secretariat.

]]>Simon LesterSun, 04 Nov 2018 07:52:00 -0500https://worldtradelaw.typepad.com/ielpblog/2018/11/the-problem-of-insufficient-notifications.htmlAdditional Implications of the Appellate Body Taking Longer Than 90 Dayshttp://feedproxy.google.com/~r/ielpblog/~3/K-EqY2kLvvA/additional-implications-of-the-appellate-body-taking-longer-than-90-days.html
https://worldtradelaw.typepad.com/ielpblog/2018/11/additional-implications-of-the-appellate-body-taking-longer-than-90-days.htmlThe Appellate Body's approach of taking longer than 90 days to issue its reports, without first getting consent from the participants in the dispute, is one issue that has given rise to the U.S. actions relating to appointment of Appellate...The Appellate Body's approach of taking longer than 90 days to issue its reports, without first getting consent from the participants in the dispute, is one issue that has given rise to the U.S. actions relating to appointment of Appellate Body Members. Apparently, this approach (along with similar actions taken by panels) may also have more narrow interpretive implications. This is from the Morocco - Hot-Rolled Steel panel report circulated on Wednesday:

7.70. The MDCCE initiated the underlying investigation on 21 January 2013, and concluded it on 12 August 2014, that is, 18 months and 22 days after initiation.99 Turkey claims that the MDCCE acted inconsistently with Article 5.10 of the Anti-Dumping Agreement because the MDCCE failed to conclude the underlying investigation within the 18-month maximum time limit permissible under that provision, having exceeded that time limit by 22 days.100 Morocco does not dispute that the MDCCE exceeded the 18-month deadline for the conclusion of an anti-dumping investigation set out in Article 5.10, but contends that Article 5.10 should be interpreted flexibly and should not be understood as establishing a rigid 18-month deadline.101

7.71. We must therefore evaluate whether, in concluding the underlying investigation 22 days after the maximum permissible time limit of 18 months under Article 5.10, the MDCCE acted inconsistently with that provision.

7.72. We note that Article 5.10 states that investigations shall "in no case" be concluded in more than 18 months. The words "in no case" make it clear that an investigating authority may not, in any case, conclude its investigation in more than 18 months, and therefore, allow for no exceptions in adherence to this time limit. Further, we note that our reading of Article 5.10 is consistent with that of the Appellate Body and past panels. The Appellate Body has indicated that the time limits for concluding investigations set out in Article 5.10 are "mandated" under the Anti-Dumping Agreement, while a previous panel has found that these time limits are "strict".102 In particular, one past panel considered that Article 11.11 of the Agreement on Subsidies and Countervailing Measures (SCM Agreement), which carries an obligation regarding conclusion of subsidies investigations that is identical to the one pertaining to anti-dumping investigations in Article 5.10 of the Anti-Dumping Agreement, does not permit prolonging the 18-month time limit under any circumstances.103

7.73. Morocco however, draws our attention to language used in certain "other contexts" of the WTO Agreements which is similar to that in Article 5.10 of the Anti-Dumping Agreement.104 Morocco contends, in particular, that the language on deadlines for concluding appellate proceedings in Articles 17.5 of the DSU, and panel proceedings in Articles 12.8 and 12.9 of the DSU, is similar to that in Article 5.10, and yet the Appellate Body and panels have "interpreted" those DSU provisions so as to allow them to exceed those deadlines.105 Morocco argues that the same flexibility with which the time frames for concluding Appellate Body and panel proceedings have been interpreted, must apply to interpreting the time frame under Article 5.10. Turkey contends, in response, that Articles 17.5, 12.8, and 12.9 of the DSU carry obligations which are different from those in Article 5.10, and are therefore irrelevant for interpreting Article 5.10. Turkey, agreeing with the European Union's views, argues that the DSU provisions in question impose deadlines on the WTO bodies, rather than on individual WTO Members, with a view to contributing to the prompt resolution of disputes. Article 5.10, in contrast, imposes obligations on investigating authorities to protect the rights of other Members' exporters.106 Morocco dismisses these differences as being "artificial", contending that WTO disputes too are initiated to secure the rights of exporters, and like anti-dumping investigations, involve competing interests and are subject to similar due process considerations.107

7.74. We consider that the DSU provisions that Morocco cites cannot serve as context for interpreting Article 5.10 of the Anti-Dumping Agreement. Morocco, notably, itself refers to these DSU provisions as appearing in "other contexts" of the WTO Agreements.108 In particular, we agree with Turkey and the European Union that the DSU provisions in question impose deadlines on the WTO bodies, rather than on individual WTO Members, with a view to contributing to the promptresolution of disputes, whereas Article 5.10 imposes obligations on investigating authorities to protect the rights of other Members' exporters. As Turkey argues, the conduct of the WTO dispute settlement proceedings, including the time frame for concluding them, is subject to the supervision of the DSB.109 The conduct of national anti-dumping investigations, in contrast, is not. We agree with Turkey that, in such a situation, it cannot be envisaged that investigating authorities conducting anti-dumping investigations would be permitted to "unilaterally deprive exporters of their rights".110 Interpreting the 18-month time limit in Article 5.10 as a flexible time limit, as Morocco considers the Panel should do, would mean that an investigating authority could, in principle, indefinitely delay an investigation, leaving exporters, whose commercial decisions depend on the outcome of the investigation, without any recourse in WTO law. We consider that such an interpretation is inconceivable under Article 5.10. The text of that provision leaves no room for flexibility in the strict obligation to adhere to the 18-month time limit and, in so doing, preserves predictability for the interested parties in an investigation. We therefore reject Morocco's argument for interpreting the time limit under Article 5.10, in light of the DSU provisions, which operate in an altogether different context.

7.75. Moreover, although Morocco asks us to interpret Article 5.10 in light of the DSU provisions, it is, effectively, asking us to do so in view of WTO dispute settlement practice. Morocco refers not to any formal interpretation of these provisions by the Appellate Body or panels, but to cases where the Appellate Body and the panels have exceeded the time limits set out in the relevant DSU provisions.111 In our view, there is no case for importing into the adherence of the time limit under Article 5.10 flexibility from WTO dispute settlement practice, which as stated above, is subject toDSB supervision.

That was a clever and creative argument by Morocco, but I suspect the Appellate Body will agree with the panel's conclusion here.

]]>Simon LesterFri, 02 Nov 2018 07:34:21 -0500https://worldtradelaw.typepad.com/ielpblog/2018/11/additional-implications-of-the-appellate-body-taking-longer-than-90-days.htmlPanel Appointments and Rosters in the New NAFTAhttp://feedproxy.google.com/~r/ielpblog/~3/CYB8ojNKv7Y/panel-appointment-and-rosters-in-the-new-nafta.html
https://worldtradelaw.typepad.com/ielpblog/2018/10/panel-appointment-and-rosters-in-the-new-nafta.htmlAs I've blogged about before, there was a problem with getting panels appointed under NAFTA Chapter 20, and Chapter 31 of the new NAFTA (USMCA) doesn't look like it fixes the problem. But there is a small tweak to the...As I've blogged about before, there was a problem with getting panels appointed under NAFTA Chapter 20, and Chapter 31 of the new NAFTA (USMCA) doesn't look like it fixes the problem. But there is a small tweak to the rules relating to rosters that is worth mentioning.

1. The Parties shall establish by January 1, 1994 and maintain a roster of up to 30 individuals who are willing and able to serve as panelists. The roster members shall be appointed by consensus for terms of three years, and may be reappointed.

1. The Parties shall establish by the date of entry into force of this Agreement and maintain a roster of up to 30 individuals who are willing to serve as panelists. The roster shall be appointed by consensus and remain in effect for a minimum of three years or until the Parties constitute a new roster. Members of the roster may be reappointed.

1. The Commission shall:...(f) review the roster established under Article 31.8 (Roster and Qualifications of Panelists) every three years and, when appropriate, constitute a new roster.

These weren't USMCA innovations, as they were borrowedfrom the TPP. (Interestingly, however, the USMCA did not borrow the TPP provisions on panelist appointment, which which might have helped to avoid the blocking these appointments.)

Let's think about the impact these changes might have on panel appointments. Under the old NAFTA, the consensus requirement made it difficult to get a roster appointed, and because the terms only lasted three years, there was the problem of frequent reappointment and thus difficulty in maintaining a roster. I don't have a full understanding of what happened with the Chapter 20 roster, but from what I can gather, during one of the reappointment processes the parties were not able to agree on a new roster, and the roster was therefore not filled. That made blocking the appointment of a panel possible in Mexico's complaint against U.S. sugar restrictions.

So how will things change under the USMCA? One key change is that the roster will "remain in effect for a minimum of three years or until the Parties constitute a new roster." Could that mean terms of more than three years? It seems like that would be permitted, but not required. If the parties appointed people to the roster for a term of ten years, that would help, because they would have to agree on a new roster less frequently.

However, the approach to roster terms may be affected by Article 30.2, which call for the USMCA Free Trade Commission to "review the roster ... every three years." If this review is to take place every three years, does that suggest that the parties will establish terms of three years to keep things synchronized? That would leave us in the same place we were with the NAFTA rosters.

Sometimes there isn't a lot of transparency about these roster appointments, so it can be hard to follow from the outside, but to the extent we can get information, it will be interesting to see how this is all implemented.

]]>Simon LesterFri, 26 Oct 2018 07:59:57 -0500https://worldtradelaw.typepad.com/ielpblog/2018/10/panel-appointment-and-rosters-in-the-new-nafta.htmlThe Legalization of the Non-Violation Concept in the GATT/WTO Systemhttp://feedproxy.google.com/~r/ielpblog/~3/M4-TQnLBzNc/the-legalization-of-the-non-violation-concept-in-the-gattwto-system.html
https://worldtradelaw.typepad.com/ielpblog/2018/10/the-legalization-of-the-non-violation-concept-in-the-gattwto-system.htmlThis is a timely piece from Graham Cook: For those interested here is a new paper called "The Legalization of the Non-Violation Concept in the GATT/WTO System". The abstract: Article XXVIII:1(b) of the GATT refers to "any benefit … being...This is a timely piece from Graham Cook:

For those interested here is a new paper called "The Legalization of the Non-Violation Concept in the GATT/WTO System". The abstract:

Article XXVIII:1(b) of the GATT refers to "any benefit … being nullified or impaired" by the application of any measure "whether or not it conflicts with the provisions of this Agreement". This paper suggests that the evolution of GATT/WTO law and practice relating to the non-violation concept is an interesting example of "legalization", in the sense of indeterminately vague treaty terms being incrementally made more precise, and sculpted into a workable legal test which is capable of being applied in the context of binding third-party adjudication. It begins by showing how GATT adjudicators transformed this open-ended concept into a workable legal test, generally covering measures with a close nexus (in terms of timing, product coverage, and effects) to specific market access commitments (Section I). It then briefly reviews how the non-violation concept spread to regional trade agreements, taking the CUSFTA and NAFTA as examples. (Section II). Following a closer look at the key non-violation provisions in the text of the Uruguay Round Agreements (including the DSU, GATS, SCM Agreement, and TRIPS Agreement), it surveys the relevant WTO case law and shows that adjudicators have not strayed very far from the traditional legal standard developed under the GATT (Section III). It suggests that the traditional legal test aligns the non-violation concept to various concepts of general international law, and to GATT safeguards provisions and the "close nexus" test developed in the context of WTO compliance proceedings (Section IV). It concludes with an overall assessment (Section V).

]]>Simon LesterThu, 25 Oct 2018 07:22:34 -0500https://worldtradelaw.typepad.com/ielpblog/2018/10/the-legalization-of-the-non-violation-concept-in-the-gattwto-system.htmlConference: "The Era of Disintegration. Taking Stock of the Dynamics of International Economic Governance in the First Two Decades of the 21st Century," Erasmus School of Law, Nov. 16, 2018http://feedproxy.google.com/~r/ielpblog/~3/CfHgvecuLSA/conference-the-era-of-disintegration-taking-stock-of-the-dynamics-of-international-economic-governan.html
https://worldtradelaw.typepad.com/ielpblog/2018/10/conference-the-era-of-disintegration-taking-stock-of-the-dynamics-of-international-economic-governan.htmlThis is from the Erasmus School of Law, Erasmus University Rotterdam: On November 16, 2018, from 9.30 am to 5.30 pm, the Erasmus School of Law (Erasmus University Rotterdam) is hosting a conference on "The Era of Disintegration. Taking Stock...This is from the Erasmus School of Law, Erasmus University Rotterdam:

On November 16, 2018, from 9.30 am to 5.30 pm, the Erasmus School of Law (Erasmus University Rotterdam) is hosting a conference on "The Era of Disintegration. Taking Stock of the Dynamics of International Economic Governance in the First Two Decades of the 21st Century," with the support of the Erasmus Initiative for Dynamics of Inclusive Prosperity.

This conference will explore the legal, socio-political, and economic dynamics set in motion by the current model of international economic integration. Whilst promising to smooth out divergences and remove barriers, the intended integrationist architecture of international and regional economic regimes seems in fact to be both sustaining and nurturing patterns of disintegration. Brexit, the Euro crisis, the US challenges to multilateralism, environmental disruptions, and resource-cursed States are only a few examples of how disintegration dynamics are unfolding rapidly at various levels. Academics and practitioners from the fields of law, economics and philosophy of economics will analyze these patterns of disintegration, trying to discern the paradox by which the very instruments and mechanisms that were introduced with the aim of achieving an ever-closer integration may have actually spurred centrifugal and structural fragmenting tendencies.

See additional details and register here. A flyer for the event can be viewed here.

]]>Inu ManakWed, 24 Oct 2018 12:10:55 -0500https://worldtradelaw.typepad.com/ielpblog/2018/10/conference-the-era-of-disintegration-taking-stock-of-the-dynamics-of-international-economic-governan.htmlThe Progressive Parts of the New NAFTAhttp://feedproxy.google.com/~r/ielpblog/~3/utM5Q_6xZLY/will-the-progressive-parts-of-the-new-nafta.html
https://worldtradelaw.typepad.com/ielpblog/2018/10/will-the-progressive-parts-of-the-new-nafta.htmlArticle 23.9 of the USMCA text as it stands now says: Article 23.9 Sex-Based Discrimination in the Workplace The Parties recognize the goal of eliminating sex-based discrimination in employment and occupation, and support the goal of promoting equality of women...Article 23.9 of the USMCA text as it stands now says:

Article 23.9 Sex-Based Discrimination in the Workplace

The Parties recognize the goal of eliminating sex-based discrimination in employment and occupation, and support the goal of promoting equality of women in the workplace. Accordingly, each Party shall implement policies that protect workers against employment discrimination on the basis of sex, including with regard to pregnancy, sexual harassment, sexual orientation, gender identity, and caregiving responsibilities, provide job-protected leave for birth or adoption of a child and care of family members, and protect against wage discrimination.

However, the Office of the U.S. Trade Representative, which led the negotiations with Canada and Mexico, made no effort to highlight the measure in a series of fact sheets issued after the deal was concluded. It also made only a terse statement on Monday, when asked about the measure.

...

The administration's quiet approach could reflect concern about pro-sovereignty conservatives "expressing outrage at a treaty that tells us how to define males and females," especially if HHS' rumored policy change goes forward and is seen as putting the U.S. in violation of its new USCMA commitment, said Bill Reinsch, a senior trade adviser at the Center for Strategic and International Studies.

"Shall implement policies" may give a bit of discretion as to what exactly is required; also, it's hard to imagine Canada and Mexico bringing complaints here (and if they did, there is still the issue of panel appointments being blocked). Nevertheless, it will be interesting to see how socially conservative Republican members of Congress react to the inclusion of this provision.

Speaking of progressive things that conservatives might hate, there are also rights for "non-national" migrant workers:

Article 23.8 Migrant Workers

The Parties recognize the vulnerability of migrant workers with respect to labor protections. Accordingly, in implementing Article 23.3 (Labor Rights), each Party shall ensure that migrant workers are protected under its labor laws, whether they are nationals or non-nationals of the Party.

]]>Simon LesterTue, 23 Oct 2018 19:18:56 -0500https://worldtradelaw.typepad.com/ielpblog/2018/10/will-the-progressive-parts-of-the-new-nafta.htmlNon-Violation Claims and Exceptionshttp://feedproxy.google.com/~r/ielpblog/~3/yP878HFB2_I/non-violation-claims-and-exceptions.html
https://worldtradelaw.typepad.com/ielpblog/2018/10/non-violation-claims-and-exceptions.htmlIn response to the recent post by Nicolas and the subsequent comments, as well as some twitter and email exchanges on the issue, I wanted to offer a few thoughts on the role of WTO exceptions in the context of...In response to the recent post by Nicolas and the subsequent comments, as well as some twitter and email exchanges on the issue, I wanted to offer a few thoughts on the role of WTO exceptions in the context of non-violation claims.

To state the obvious, WTO obligations are not relevant for non-violation claims. These claims are about nullification or impairment of benefits, which exists regardless of whether an obligation has been violated. And if obligations are irrelevant, then exceptions to those obligations could also be seen as irrelevant, as exceptions are invoked when there is an allegation that an obligation has been violated.

On the other hand, one element of the legal standard for non-violation claims is that there must be a "benefit accruing under the relevant agreement." The Japan - Film panel elaborated on this element as follows:

10.76 ... in order for expectations of a benefit to be legitimate, the challenged measures must not have been reasonably anticipated at the time the tariff concession was negotiated. If the measures were anticipated, a Member could not have had a legitimate expectation of improved market access to the extent of the impairment caused by these measures.

While obligations and exceptions are not directly applied in non-violation claims, could there nonetheless be a role for WTO exceptions when considering the reasonable anticipation of measures noted by the Film panel? In this regard, when examining whether a particular measure could have been "reasonably anticipated," you could look at whether it was tied to a public policy objective, such as conservation of exhaustible natural resources under GATT Article XX(g). Where a measure is justified under GATT Article XX, perhaps there is an argument that it should have been reasonably anticipated by the complaining government, as that government was on notice that other governments might take such measures. In this way, the underlying concerns of WTO exceptions could be taken into account in the context of a non-violation claim, even if you cannot invoke these exceptions directly as a defense to such claims.

In my view, however, while reference to the exceptions is a factor that could be considered, any such consideration should not be determinative for a non-violation claim. Even if the measure is justified under an exception, it is not necessarily the case that the complaining government should have anticipated that kind of measure or that particular measure. To illustrate this, let's look at the context of environmental measures. New environmental problems are discovered over time, and it may not be appropriate to expect governments to anticipate that any or all of their exports could be subject to environmental regulation for issues that were unknown at the point in time when a concession was made. Let's say the responding government made a concession on a product in 1947, and the product was discovered to be harmful to human health in 2000 and then banned. I don't think it is reasonable to anticipate product-specific harms, and measures taken in response, that we have no inkling of yet.

Of course, as hinted at above, you could argue that every measure justified under GATT Article XX should be reasonably anticipated, simply by virtue of its justification under that provision. The different approaches are just policy choices, and I don't think it would be a disaster for the system to take an approach that gives primacy to Article XX and other exceptions. Nonetheless, in these situations, the rebalancing that I think non-violations claims are designed to encourage is appropriate.

8.281 Furthermore, in the light of our reasoning in paragraph 8.272 above, we consider that the special situation of measures justified under Article XX, insofar as they concern non-commercial interests whose importance has been recognized a priori by Members, requires special treatment. By creating the right to invoke exceptions in certain circumstances, Members have recognized a priori the possibility that the benefits they derive from certain concessions may eventually be nullified or impaired at some future time for reasons recognized as being of overriding importance. This situation is different from that in which a Member takes a measure of a commercial or economic nature suchas, for example, a subsidy or a decision organizing a sector of its economy, from which it expects a purely economic benefit. In this latter case, the measure remains within the field of international trade. Moreover, the nature and importance of certain measures falling under Article XX can also justify their being taken at any time, which militates in favour of a stricter treatment of actions brought against them on the basis of Article XXIII:1(b).

8.282 Consequently, the Panel concludes that because of the importance conferred on them a priori by the GATT 1994, as compared with the rules governing international trade, situations that fall under Article XX justify a stricter burden of proof being applied in this context to the party invoking Article XXIII:1(b), particularly with regard to the existence of legitimate expectations and whether or not the initial Decree could be reasonably anticipated.

I'm not sure exactly what the panel had in mind, but it may be close to my view, where justification under an exception becomes a factor to consider, but is not determinative by itself.

]]>Simon LesterSun, 21 Oct 2018 06:51:12 -0500https://worldtradelaw.typepad.com/ielpblog/2018/10/non-violation-claims-and-exceptions.htmlLimiting The Appellate Body's Power By Giving It More Powerhttp://feedproxy.google.com/~r/ielpblog/~3/vjyF8_-x1Vg/limiting-the-appellate-bodys-power-by-giving-it-more-power.html
https://worldtradelaw.typepad.com/ielpblog/2018/10/limiting-the-appellate-bodys-power-by-giving-it-more-power.htmlThis is from a new paper by former Canadian government official Rob McDougall: the Appellate Body could be given the authority to decide which appeals, or which parts of appeals, to hear (certiorari), based on broadly defined circumstances such as...This is from a new paper by former Canadian government official Rob McDougall:

the Appellate Body could be given the authority to decide which appeals, or which parts of appeals, to hear (certiorari), based on broadly defined circumstances such as when panel reports risk creating inconsistency, demonstrate evidence of manifest legal error, involve matters of significant public interest or of systemic interest to the trading system, or disputes over imprecise obligations.

People like to feel acknowledged and heard, so I understand why governments want to make sure their arguments to the Appellate Body are addressed. But where the Appellate Body has examined an appellate argument, and is certain that it plans to reject it because it agrees with the panel's reasoning, is there much value in having the Appellate Body go through the same reasoning that the panel did? Would it be enough for the Appellate Body to simply uphold the panel's finding without further comment?

]]>Simon LesterThu, 18 Oct 2018 12:36:58 -0500https://worldtradelaw.typepad.com/ielpblog/2018/10/limiting-the-appellate-bodys-power-by-giving-it-more-power.htmlCall for Papers: PluriCourts Annual Workshop on The Political and Legal Theory of International Courts and Tribunals 2019http://feedproxy.google.com/~r/ielpblog/~3/rfi93E4Hxmg/call-for-papers-pluricourts-annual-workshop-on-the-political-and-legal-theory-of-international-court.html
https://worldtradelaw.typepad.com/ielpblog/2018/10/call-for-papers-pluricourts-annual-workshop-on-the-political-and-legal-theory-of-international-court.htmlPluriCourts Annual Workshop on The Political and Legal Theory of International Courts and Tribunals 2019: Multilevel Separation of Authority - Autonomy and International Courts June 24-26, 2019, University of Oslo Deadline: 1 December, 2018 Homepage: https://www.jus.uio.no/pluricourts/english/news-and-events/news/2018/workshop-on-the-political-and-legal-theory-of-inte.html Call for Papers PluriCourts...PluriCourts Annual Workshop on The Political and Legal Theory of International Courts and Tribunals 2019:

Multilevel Separation of Authority - Autonomy and International Courts

PluriCourts announces a workshop that brings together scholars of philosophy, political theory and legal theory who study one or more regional and international courts and tribunals (ICs), and in particular issues concerning the multi-level ‘horizontal’ and ‘vertical’ separation of authority, or questions concerning autonomy.

States have established manifold regional and international ICs to resolve disputes, interpret treaties, and deter illegal behavior. These ICs cover a range of issues including, human rights, trade, investment, border disputes, and international crimes. ICs’ competences, level of authority, method of interpretation, and geographical reach widely vary. ICs’ increase in number and influence has spawned controversy and complaints, often phrased as charges that they are illegitimate. We especially invite papers that address one or more such ICs concerning the following themes. The workshop welcomes both abstract and practice-focused perspectives. Some travel grants are available upon request.

The vertical and horizontal allocation of authority

Brexit, African exits from ICC and other recent challenges against ICs urge renationalization of authority now placed at a regional or international level. States have delegated or pooled some sovereign rights to an IC in an issue area for various objectives: to enhance the state’s commitments, to coordinate better, or to manage cross border concerns. Such challenges of IC demanding the renationalization of authority are directed at the ‘vertical’ authority of ICs over states. The ‘horizontal’ allocation of authority among ICs, and between ICs and other international bodies is also questioned. With what right should ICs review other bodies and contribute to international enforcement? What are we to make of recent challenges concerning the ‘fragmentation’ among the IC: how states now create ‘competing’ regional ICs; and ICs resistance and resilience against formal harmonization – as between the European Court of Human Rights and the Court of Justice of the European Union?

Autonomy

The autonomy of individuals has been one fundamental normative value and standard to evaluate and challenge the justice and legitimacy of political institutions. The autonomy of political communities, collective self-determination, is also widely praised as an important normative ideal. Is autonomy – individual or collective - a good guide to normatively assess international courts? In what way does the legitimacy of ICs depend on them protecting or promoting individual autonomy? Is the authority of IC necessarily in conflict with the collective self-rule of states? Or is horizontal delegation of power compatible with, perhaps even necessary for, effective collective autonomy in our globalized world? Can the political or collective autonomy of peoples justify a space that international authorities such as ICs should – or should not – interfere with? Or is collective autonomy different from individual autonomy in providing such limits?

We invite papers that relate to either one of these two topics or the theory of legitimacy of ICs more general. The following indicate some of several possible issues:

The concept of legitimacy for ICs

The appropriate legitimacy standards for ICs from the perspectives of history of ideas and/or contemporary legal and political theory, such as human rights, transparency, or rule of law

Their multilevel separation of authority, and its impact on adjudication

Subsidiarity principles guiding the allocation of authority between ICs and the national level

Specialization and fragmentation in ICs

The relevance of protecting individual or collective autonomy for the legitimacy of ICs

January 10, 2019 Decisions on acceptance of proposals and travel grants announced

May 15, 2019 Draft papers due

June 24-26, 2019 Workshop

]]>Simon LesterThu, 18 Oct 2018 12:36:05 -0500https://worldtradelaw.typepad.com/ielpblog/2018/10/call-for-papers-pluricourts-annual-workshop-on-the-political-and-legal-theory-of-international-court.htmlJIEL Call for Papers: “Trade Wars”http://feedproxy.google.com/~r/ielpblog/~3/wMKF9lNiyH8/jiel-call-for-papers-trade-wars.html
https://worldtradelaw.typepad.com/ielpblog/2018/10/jiel-call-for-papers-trade-wars.htmlThe Editorial Board of the Journal of International Economic Law is seeking papers for a forthcoming special issue on ‘Trade Wars’, planned for publication in late 2019. This special issue seeks to take stock of the current trade wars, provide...The Editorial Board of the Journal of International Economic Law is seeking papers for a forthcoming special issue on ‘Trade Wars’, planned for publication in late 2019.

This special issue seeks to take stock of the current trade wars, provide an explanation of their causes and conditions of possibility, and offer reflections on the best responses to them, both in the short term and looking further ahead. Starting from the premise that the structure of the international economic order may be at a point of inflection, it both aims to set this moment in context, and to offer ideas for what international economic law could and should look like looking ahead.

One of the aims of the special issue is to produce a coherent set of papers which collectively takes a broader view than much of the existing literature. While each paper would include a focus on specific pragmatic issues, they would ideally do so with an explicit appreciation of, and reflection on, the broader systemic issues which may underlie them.

It is currently envisaged that the Special Issue will be organized around three broad themes. First, what is happening this time around, how is it differentiated historically, and what new concerns arise? Second, what are some of the economic, political, and systemic conflicts that triggered the current crisis? Third, at the systemic level, what new rules are needed in order to address the current conflicts? Indicative topics and questions include:

How does the current set of trade wars compare to similar periods in history, both in terms of the instruments used, and their likely economic and other effects?

How has the political economy of protectionism been transformed by the transnationalisation of production and the multi-decade consolidation of global value chains? Can we still understand the politics of protectionism within the classical political economy story of trade? Or do we need to rethink the model by incorporating new variables, or by enriching it with insights from behavioral economics?

If US-China trade frictions are at the heart of the present problems, the deeper issue may be the emergence of new market and quasi-market forms across the globe. How has the global economic order dealt with institutional diversity of this kind before? How can it, and how should it, do so now?

What may be the larger systemic consequences of the emergence of China’s Belt and Road initiative, particularly in the context of the potential disintegration of the multilateral system? How are these two trends likely to play out, and what might be the structure of the new order which is emerging?

For the first time, at least since WW2, trade wars are now bound up with larger geopolitical struggles involving both economic and national security dimensions. How has this changed the politics and dynamics of the current trade wars? What does the national security framing mean for the possibility of negotiated solutions?

The United States is re-orienting its export control regime in order to deal with concerns over the transfer of technology to potentially hostile countries. Doing so unilaterally has raised questions of effectiveness and cost for American companies. How was the multilateral export control regime negotiated and managed during the cold war, and are there lessons for today? How might such export controls play out from a development perspective?

Proposals of no more than 750 words should be submitted by email to jiel@law.georgetown.edu by 30 November 2018. For those proposals accepted, completed manuscripts of 6000-8000 words are to be submitted for peer review by 1 June 2018. Selected authors will also have an opportunity to present their paper at the G2 (Georgetown Law – Graduate Institute) Annual WTO Conference in Geneva, planned for June 7-8, 2019.

Proposals are specifically encouraged from scholars working in the global South.

Anne van Aaken

Chad Bown

Andrew Lang

(Editors of the Special Issue)

]]>Simon LesterWed, 17 Oct 2018 06:03:19 -0500https://worldtradelaw.typepad.com/ielpblog/2018/10/jiel-call-for-papers-trade-wars.htmlCall for Papers: Trade Law & Developmenthttp://feedproxy.google.com/~r/ielpblog/~3/VEsWLT9yP84/call-for-papers-trade-law-development.html
https://worldtradelaw.typepad.com/ielpblog/2018/10/call-for-papers-trade-law-development.htmlThis is from the Managing Editor of the student-run journal Trade, Law and Development: Founded in 2009, the philosophy of Trade, Law and Development has been to generate and sustain a constructive and democratic debate on emergent issues in international...This is from the Managing Editor of the student-run journal Trade, Law and Development:

Founded in 2009, the philosophy of Trade, Law and Development has been to generate and sustain a constructive and democratic debate on emergent issues in international economic law and to serve as a forum for the discussion and distribution of ideas. In keeping with these ideals, the Board of Editors is pleased to announce Trade Facilitation as the theme for its next Special Issue (Vol. XI, No. 1).

Manuscripts may be submitted via e-mail, ExpressO, or through the TL&D website. For further information about the journal and submission guidelines, please visit www.tradelawdevelopment.com.

In case of any queries, please feel free to contact us at: editors[at]tradelawdevelopment[dot]com.

]]>Inu ManakTue, 16 Oct 2018 12:07:26 -0500https://worldtradelaw.typepad.com/ielpblog/2018/10/call-for-papers-trade-law-development.htmlDeadline Extended— The GNLU International Moot Court Competition (GIMC)http://feedproxy.google.com/~r/ielpblog/~3/XNzT8m6EbNo/deadline-extended-the-gnlu-international-moot-court-competition-gimc.html
https://worldtradelaw.typepad.com/ielpblog/2018/10/deadline-extended-the-gnlu-international-moot-court-competition-gimc.htmlThis is from Gujarat National Law University: Gujarat National Law University is glad to inform you that preparations are currently underway for yet another edition of the GNLU International Moot Court Competition (GIMC). The 11th edition of the GIMC is...This is from Gujarat National Law University:

Gujarat National Law University is glad to inform you that preparations are currently underway for yet another edition of the GNLU International Moot Court Competition (GIMC). The 11th edition of the GIMC is scheduled to take place from February 13-17, 2019 in Gandhinagar, Gujarat (India). The moot problem of this edition revolves around the Agreement of Subsidies and Countervailing Measures.

For more details please visit the website here. The full announcement is also available here. The deadline has been extended to November 25, 2018.

]]>Inu ManakTue, 16 Oct 2018 11:58:26 -0500https://worldtradelaw.typepad.com/ielpblog/2018/10/deadline-extended-the-gnlu-international-moot-court-competition-gimc.htmlGuest Post: Why WTO Members Should Bring Pure Non-Violation Claims Against National Security Measureshttp://feedproxy.google.com/~r/ielpblog/~3/CkMAYKSiXSM/guest-post-why-wto-members-should-bring-pure-non-violation-claims-against-national-security-measures.html
https://worldtradelaw.typepad.com/ielpblog/2018/10/guest-post-why-wto-members-should-bring-pure-non-violation-claims-against-national-security-measures.htmlThis is a guest post from law professor Nicolas Lamp: There is no doubt that, over the past year, trade officials in WTO Members have spent countless hours agonizing over the appropriate response to Trump’s national security tariffs on steel...This is a guest post from law professor Nicolas Lamp:

There is no doubt that, over the past year, trade officials in WTO Members have spent countless hours agonizing over the appropriate response to Trump’s national security tariffs on steel and aluminium. They have come up with a number of options: negotiating voluntary export restraints, imposing unilateral retaliation, treating the measures as safeguards, and bringing WTO disputes. Each of these options has its own combination of advantages and drawbacks: VERs have the advantage of keeping (some) trade flowing, but they represent a surrender to US demands and set a trade-restrictive and WTO-illegal precedent for the settlement of future disputes; imposing unilateral retaliation is a fast and hard response that makes the use of national security measures economically (and politically) painful for the imposing country, but it also hurts the retaliating countries’ economy and represents a further step out of the rules-based trading regime. Bringing WTO disputes superficially reinforces the rule of law in international trade, but actually has the potential to undermine it even further: whatever a panel decides on the question of the justiciability of the GATT Art. XXI exception will be deeply problematic for many WTO Members. WTO dispute settlement proceedings also take a long time, which is why many Members have imposed unilateral retaliation while they wait for their dispute to run its course.

However, there is an option for responding to national security measures that avoids many of the drawbacks of the courses of action that WTO Members have actually chosen: bringing pure non-violation complaints. Pure non-violation complaints are superior to violation complaints and unilateral retaliation for at least five reasons:

1. The complainant can’t lose

Non-violation complaints are failsafe: almost by definition, trade measures imposed for national security reasons will nullify or impair benefits under the GATT 1994 or the GATS. The only question that needs to be settled in dispute settlement is the amount of the nullification or impairment, which will determine the amount of compensation to which the complaining member will be entitled as part of a “mutually satisfactory adjustment”. By contrast, bringing a violation complaint against a national security measure might result in a finding that the measure is saved by the national security exception, in which case the complainant is left with no recourse.

2. The complainant should get a ruling fast

Non-violation complaints should be much faster to adjudicate than violation complaints: since there is no assessment of the legality of the measures adopted by the respondent, the only issue on which a panel will have to rule is the question of whether benefits accruing to the complainant have been nullified or impaired by the respondent. The appeal stage could be avoided altogether (presuming a minimum of good faith on the part of the respondent). Similarly, there would be no need for compliance proceedings; pursuant to DSU Art. 26.1(c), the only remaining stage would be Article 21.3(c) proceedings to determine the level of nullification or impairment (and potentially Art. 22 proceedings regarding the amount and form of retaliation).

3. The complainant doesn’t upset anyone

Bringing a violation complaint against another Member’s national security measure will inevitably be perceived as confrontational: such a complaint necessarily implies an accusation that the respondent has not adopted the measure in good faith. By contrast, a non-violation complaint is merely an attempt to restore the balance of concessions that existed before the national security measures were imposed, while respecting the national security determination made by the respondent. In fact, the US has admitted that non-violation complaints remain available for national security measures.

4. The complainant preserves the rules-based trading system

There are good reasons why the national security exception has not been litigated to date: everyone knows that the result will be explosive, in one way or another. If the panel decides to review the national security rationale provided by the respondent, many WTO Members will find it to be an unacceptable intrusion into their sovereignty. On the other hand, if the panel decides that the national security exception is non-justiciable, it will give carte blanche to WTO Members to impose measures on national security grounds and thereby shield them from WTO challenges. A non-violation complaint sidesteps these highly charged questions entirely: It allows WTO members to address their conflicts using WTO procedures and thereby reinforces the rules-based trading system without burdening panels with legal questions for which there are no good responses.

5. The complaint focuses on what really matters

One could argue that the question of whether a national security measure is WTO-legal or illegal is beside the point: a Member who imposes a measure for national security reasons is unlikely to remove the measure because the WTO DSB recommended that it do so. Given that withdrawal of the measure is not a realistic outcome of WTO proceedings, the only benefit of such proceedings is an authoritative assessment of the amount of compensation to which the complainant is entitled or the retaliation that the complainant can implement, which corresponds to the amount of nullification or impairment. If that is the case, why not go straight to the question of nullification or impairment of benefits by bringing a pure non-violation complaint?

In addition to the cultural carveout, [Jesús] Seade, [the chief NAFTA negotiator for Mexican president-elect Andrés Manuel López Obrador], touted the USMCA’s dispute settlement system, particularly Chapter 20 state-to-state dispute resolution, along with the deal’s provisions for small and medium-sized enterprises and those pertaining to labor, environment and anti-corruption.

“Who benefits from a stronger dispute resolution system? The big guy, or the one trading with the big guy? Of course it’s the one trading with the big guy,” he told Inside U.S. Trade. “Dispute resolution is for the small country. So Mexico is particularly interested.”

“There were two heavy proposals, contentious for somebody. One was Mexico seeking to remedy that and there was the U.S. trying to introduce veto power for the executive,” he told Inside U.S. Trade. “And when I discussed -- this was something that fell to me -- this with Lighthizer. [I said,] ‘We have to eliminate your poison pill.' He said, ‘Okay, but we leave the panels alone.’”

“I said okay, because in the history of the NAFTA this has been a problem only once. The sugar case,” he added, referring to a dispute brought by Mexico in 2000 in which the U.S. blocked the establishment of a panel. “It has been a problem once. If the issue is very politicized, you may have a problem, but it’s not something that will happen frequently, so we said okay.”

One way to look at the problem with Chapter 20 is that, as Seade says, it was only one case. But another way to look at the situation is this:

In the beginning, the NAFTA dispute mechanism worked well enough. From 1995 through the middle of 2000, there were 18 complaints filed, with panels ruling on three of those complaints. But then in late 2000, in a claim filed by Mexico against U.S. restrictions on sugar, the United States blocked the appointment of the panel.

Since that time, NAFTA complaints have essentially dried up. From 2001 until today, there have only been four complaints, none of which have gone to a panel.

Of course, as we noted: "Proving cause and effect is difficult, and it is possible that the decline in NAFTA complaints is unrelated to the blocking of the panel appointment process. Perhaps the NAFTA governments simply did not have many complaints about each other's behavior during this later period."

It's still not clear to me how NAFTA dispute settlement under the new Chapter 31 will function in terms of panel appointments. I've heard it suggested that the parties will try to fix the roster problems. We'll see if that happens, and we'll also whether the parties have disputes and, if so, whether they will be heard.

]]>Simon LesterFri, 12 Oct 2018 10:33:58 -0500https://worldtradelaw.typepad.com/ielpblog/2018/10/mexicos-view-of-the-problems-with-nafta-chapter-20.htmlRegulatory Issues in the New NAFTAhttp://feedproxy.google.com/~r/ielpblog/~3/2fcQ4Eqtg2w/regulatory-cooperation-in-the-new-nafta.html
https://worldtradelaw.typepad.com/ielpblog/2018/10/regulatory-cooperation-in-the-new-nafta.htmlThe chapter on "Good Regulatory Practices" (Chapter 28) was concluded early on in the NAFTA renegotiations, but until last week there were a lot of unanswered question as to what it would include. On first read, it appears that this...The chapter on "Good Regulatory Practices" (Chapter 28) was concluded early on in the NAFTA renegotiations, but until last week there were a lot of unanswered question as to what it would include. On first read, it appears that this chapter goes beyond anything we've seen so far in similar chapters found in the CPTPP (Chapter 25) and CETA (Chapter 21). Below I provide a few highlights and some initial thoughts. I expect to do a more detailed analysis in the coming weeks.

To start, the scope of the chapter seems very similar to the CPTPP, which similarly reads:

2. Accordingly, this Chapter sets forth specific obligations with respect to good regulatory practices, including practices relating to the planning, design, issuance, implementation, and review of the Parties’ respective regulations.

The CPTPP includes a provision encouraging the creation of an OIRA-like body to coordinate regulatory policy (Article 25.4):

1. The Parties recognise that regulatory coherence can be facilitated through domestic mechanisms that increase interagency consultation and coordination associated with processes for developing regulatory measures. Accordingly, each Party shall endeavour to ensure that it has processes or mechanisms to facilitate the effective interagency coordination and review of proposed covered regulatory measures. Each Party should consider establishing and maintaining a national or central coordinating body for this purpose.

There is similar language in the USMCA (Article 28.3), with a slight tweak:

The Parties intend to maintain their respective central regulatory coordinating bodies, within their respective mandates and consistent with their law.

This is an expected adjustment, as the CPTPP regulatory coherence chapter was largely aimed at developing countries with relatively underdeveloped regulatory regimes.

Some expanded and new items, however, are worth noting. For instance, there are a set of provisions on transparency that address some long-standing issues for the United States, which it has tried to address not only in its FTAs, but also at the WTO. For example:

Article 28.5: Information Quality

Each Party recognizes the need for regulations to be based upon information that is reliable and of high quality. To that end, each Party should adopt or maintain publicly available guidance or mechanisms that encourage its regulatory authorities when developing a regulation to:

(a) seek the best, reasonably obtainable information, including scientific, technical, economic, or other information relevant to the regulation it is developing

(b) rely on information that is appropriate for the context in which it is used; and

(c) identify sources of information in a transparent manner, as well as any significant assumptions and limitations.

And there are also provisions that resemble an "early warning system" for new regulation, so that the Parties have enough time to provide feedback on proposed measures:

Article 28.6: Early Planning

Each Party shall publish annually a list of regulations that it reasonably expects within the following 12 months to adopt or propose to adopt. Each regulation identified in the list should be accompanied by:

(a) a concise description of the planned regulation;

(b) a point of contact for a knowledgeable person in the regulatory authority responsible for the regulation; and

(c) an indication, if known, of sectors to be affected and whether there is any expected significant effect on international trade or investment.

Entries in the list should also include, to the extent available, time tables for subsequent actions, including those providing opportunities for public comment under Article 28.9.

Throughout the chapter there is an emphasis on science-based risk assessment, and no mention of the word "precautionary" in any form (the same is true for the SPS chapter). On early planning, it is worth pointing out this is a process that is already covered by WTO notification requirements, but, to my knowledge, members do not tend to go into great detail about about the sectors affected by proposed measures (though they do often list products covered) and do not provide analysis of the expected impact on trade. These are issues that usually are raised later by the countries affected by a proposed measure in the TBT and SPS committees.

Other transparency provisions, such as Article 28.9 (Transparent Development of Regulation) seem generally similar to what's in the CPTPP. These provisions focus on impact assessment, providing a rationale for the measure, and an explanation of the data used in the impact assessment.

There is also mention of regulatory cooperation initiatives that are more similar to the CETA in their expansive coverage than the CPTPP. For instance, Article 28.17 provides:

3. The Parties recognize that a broad range of mechanisms including those set forth in the WTO Agreement, exists to help minimize unnecessary regulatory differences and facilitate trade or investment, while contributing to each Party’s ability to meet its public policy objectives. These activities may include, as appropriate to the particular circumstances:

(a) early stage formal or informal exchange of technical or scientific information or data, including coordinating research agendas, to reduce duplicative research;(b) exploring possible common approaches to the evaluation and mitigation of risks or hazards, including those potentially posed by the use of emerging technologies;(c) wherever appropriate, regulating by specifying performance requirements rather than design characteristics, to promote innovation and facilitate trade;(d) seeking to collaborate in relevant international fora;(e) exchanging information, such as of technical or practical nature, on regulations that each Party is developing to maximize the opportunity for common approaches;(f) co-funding of research in support of regulations and implementation tools of joint interest;(g) facilitating the greater use of relevant international standards, guides, and recommendations as the basis for regulations, testing, and approval procedures;(h) when developing or implementing regulations, considering relevant scientific or technical guidance documents developed through international collaborative initiatives;(i) considering common approaches to the display of product or consumer information;(j) considering the development of compatible platforms or formats for industry submission of product information for regulatory review;(k) coordinating in the implementation of regulations and sharing compliance information, including, as appropriate by entering into confidentiality agreements; and(l) periodically exchanging information, as appropriate, concerning any planned or ongoing post-implementation review or evaluation of regulations in effect affecting trade or investment.

Now, it's not entirely clear to what extent this replaces the current regulatory cooperation initiatives already in place, mainly the Canada-U.S. Regulatory Cooperation Council (RCC). The U.S. and Canada signed an MOU in June this year recommitting themselves to the work of the RCC, so it is entirely possible that the RCC will continue in parallel, but only to address bilateral regulatory issues between the U.S. and Canada. The U.S.-Mexico High Level Regulatory Cooperation Council (HLRCC) has been far less successful than its Canada-U.S. counterpart (both were founded in 2011), so the inclusion of regulatory cooperation in the new NAFTA may be a way to bring Mexico back in to the fold, and allow for trilateral cooperation where possible. That is a good thing. At the end of the day, however, the extent to which regulatory cooperation initiatives will be pursued is entirely up to the parties, and the hortatory language used in these provisions supports this conclusion.

Finally, the item that really piqued my interest is a provision that makes the chapter subject to dispute settlement:

Article 28.20: Application of Dispute Settlement

1. Recognizing that a mutually acceptable solution can often be found outside recourse to dispute settlement, a Party shall exercise its judgement as to whether recourse to dispute settlement under Chapter 31 (Dispute Settlement) would be fruitful.

2. Chapter 31 (Dispute Settlement) shall apply with respect to a responding Party as of one year after the date of entry into force of this Agreement for that Party.

3. No Party shall have recourse for dispute settlement under Chapter 31 (Dispute Settlement) for a matter arising under this Chapter except to address a sustained and recurring course of action or inaction that is inconsistent with a provision of this Chapter.

This is surprising for a few reasons. First, in the CPTPP, Article 25.11 states that the Parties do not have recourse to dispute settlement "for any matter arising under" the regulatory coherence chapter. Given the mixed levels of development among the CPTPP parties, along with the fact that the provisions in the regulatory coherence chapter generally focused on procedural aspects of domestic regulatory reform as opposed to cooperation, it was not surprising that the chapter would not be subject to dispute settlement. What is interesting is that the U.S. departed from the CPTPP model of regulatory coherence, and has instead built something that incorporates some aspects of the CPTPP, but also relies heavily on learned experience from the U.S.-Canada RCC process. Second, this is also a departure from Canada's obligations in CETA, which does not include a provision on dispute settlement at all in its regulatory cooperation chapter, but does emphasize that "The Parties may undertake regulatory cooperation activities on a voluntary basis." The inclusion of the word voluntary, which does not appear anywhere in the Good Regulatory Practices chapter of the USMCA is also a notable difference.

But before we get all worked up about the potential disputes that may be filed in the coming years, I also want to highlight another little nugget in Annex 28-A, which states:

The following entities are not a regulatory authorities for the purposes of this Chapter:

(a) for Canada: the Governor in Council; and

(b) for the United States: the President.

Leaving aside the fact that enforcing some of the regulatory process requirements, such as scientific risk assessment, early notification, and trade impact analysis will be difficult under any circumstances, I find it curious that the entities listed above were specifically carved out of the chapter. Let's say the President of the United States decides to take some regulatory action that does not comport with the procedural and other notification requirements of this chapter, say by enacting a trade restrictive regulation overnight, then that is not subject to dispute under this chapter. I suppose we will still need to rely on the WTO to deal with these matters.

Overall, while the Good Regulatory Practices chapter is a novel innovation that builds upon long standing shared practices between Canada and the United States, it remains to be seen how it will function, and what, if any, outcomes it will produce to reduce the burden of regulatory barriers in North America.

]]>Inu ManakWed, 10 Oct 2018 13:22:17 -0500https://worldtradelaw.typepad.com/ielpblog/2018/10/regulatory-cooperation-in-the-new-nafta.htmlGuest Post: Protecting Indigenous Rights in the United States-Mexico-Canada Agreementhttp://feedproxy.google.com/~r/ielpblog/~3/L_aZk-A8R0k/guest-post-protecting-indigenous-rights-in-the-united-states-mexico-canada-agreement.html
https://worldtradelaw.typepad.com/ielpblog/2018/10/guest-post-protecting-indigenous-rights-in-the-united-states-mexico-canada-agreement.htmlThis is a guest post from Risa Schwartz, a sole practitioner based in Canada focussing on the intersections between international trade and investment law and Indigenous rights (@risaschwartzlaw, risa@risaschwartzinternationallaw.com) The United States-Mexico-Canada agreement includes a new provision for the protection...This is a guest post from Risa Schwartz, a sole practitioner based in Canada focussing on the intersections between international trade and investment law and Indigenous rights (@risaschwartzlaw, risa@risaschwartzinternationallaw.com)

The United States-Mexico-Canada agreement includes a new provision for the protection of the rights of Indigenous peoples. This exception, found in Chapter 32, Exceptions and General Provision, was included at the behest of Canada, but is drafted to apply to all three parties of USMCA.

Found at Article 32.5, the new exception reads:

Indigenous Peoples Rights

Provided that such measures are not used as a means of arbitrary or unjustified discrimination against persons of the other Parties or as a disguised restriction on trade in goods, services, and investment, nothing in this Agreement shall preclude a Party from adopting or maintaining a measure it deems necessary to fulfill its legal obligations to indigenous peoples. United States-Mexico-Canada Agreement

Canada takes the position that “Canada’s obligations to Indigenous peoples under the Canadian Constitution cannot be superseded or undermined by commitments under a free trade agreement”[1]. However, the addition of a general exception language to USMCA makes it clear to states and foreign investors that USMCA parties are free to meet their legal obligations to Indigenous peoples without concern that such actions may run afoul of trade or investment rules. Perhaps most importantly, this exception will apply to all three states, which is a confirmation that Canada, Mexico and the United States have affirmed their commitment to Indigenous rights in an international economic agreement.

The general exception provision for Indigenous peoples is a first for North America but it is not the exception for Indigenous peoples in a free trade agreement. The Treaty of Waitangi exception was developed by New Zealand in 2001 for a bilateral free trade agreement with Singapore and is found in all New Zealand trade agreements, including the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP). According to New Zealand’s Foreign Affairs and Trade website, “Nothing in this new Agreement will prevent the Crown from meeting its Treaty obligations to Māori. As with all of New Zealand’s contemporary trade agreements, CPTPP includes a specific provision preserving the pre-eminence of the Treaty of Waitangi in New Zealand.”[2] The Treaty of Waitangi exception allows for the “…adoption by New Zealand of measures it deems necessary to accord more favourable treatment to Maori in respect of matters covered by this Agreement, including in fulfilment of its obligations under the Treaty of Waitangi.”[3]

Similar to the USMCA exception, a measure taken by New Zealand cannot be “used as a means of arbitrary or unjustified discrimination…or as a disguised restriction on trade in goods and services or investment…” . As well, the measure must be deemed necessary by New Zealand, and the exception is drafted in a manner that is self-judging. The arbitrary and unjustified discrimination language is a clear reference to the chapeau of GATT Article XX. Trade policy analysts and trade lawyers may be comfortable with this language and find it to be protective, but there were concerns by many Māori groups that the exception language did not go far enough to protect their interests, especially in the CPTTP, which includes an Investment chapter with Investor-State Dispute Settlement. A challenge to whether the exception was protective of Māori interests was the subject of a Waitangi Tribunal Report issued in 2016[4]. The Tribunal concluded that the exception offered a reasonable degree of protection to Māori interests. However, they were concerned by the language that limited the exception to measures that accord more favourable treatment.

The USMCA has done away with the limiting language of “…to accord more favourable treatment” as it can apply to any measures that the Parties take to fulfil their legal obligations to Indigenous peoples, as long as the measure is not arbitrary or unjustifiable discrimination.

Canada has included a footnote, which is added as a clarification, which specifies Canada’s legal obligations to Indigenous peoples. Mexico and the United States did not add any footnotes to Article 32.5. The Canadian footnote reads “For greater certainty, for Canada the legal obligations include those recognized and affirmed by section 35 of the Constitution Act, 1982 or those set out in self-government agreements between a central or regional level of government and indigenous peoples”. Section 35 of the Constitution Act, 1982 recognizes and affirms existing Aboriginal and treaty rights and rights acquired through land claims. The legal obligations listed in the footnote should not be seen an exhaustive list, as noted by the use of the word “include” in the footnote. Arguably, legal obligations applicable to Indigenous peoples Canada, as well as in Mexico and the United States, include Indigenous rights in the United Nations Declaration on the Rights of Indigenous Peoples which was adopted by Mexico in 2007 and subsequently endorsed by the United States and Canada

]]>Simon LesterMon, 08 Oct 2018 19:37:06 -0500https://worldtradelaw.typepad.com/ielpblog/2018/10/guest-post-protecting-indigenous-rights-in-the-united-states-mexico-canada-agreement.htmlWhat If National Security Tariffs Spread To Other Countries?http://feedproxy.google.com/~r/ielpblog/~3/zm_YzZV0M1U/what-if-national-security-tariffs-spread-to-other-countries.html
https://worldtradelaw.typepad.com/ielpblog/2018/10/what-if-national-security-tariffs-spread-to-other-countries.htmlThis is a question from an Inside US Trade reporter to U.S. Trade Representative Robert Lighthizer: Q Yeah. Thank you, Ambassador. My name is Anshu, with Inside U.S. Trade. ... And then in a broader sense, on the use of...This is a question from an Inside US Trade reporter to U.S. Trade Representative Robert Lighthizer:

Q Yeah. Thank you, Ambassador. My name is Anshu, with Inside U.S. Trade. ... And then in a broader sense, on the use of 232, the President sort of said that he made the "economic security is national security" argument -- we need a thriving economy, strong manufacturing base.

My question is that, in the broader sense, if other countries start using that justification -- that economic security is national security -- and consistent with your view that Article 21 is self-judging, like what recourse would the U.S. have if other countries started imposing national security on tariffs on us? Thanks.

AMBASSADOR LIGHTHIZER: Well, I would say, first of all, I think every country in the world that sits down and thinks about it believes that economic security is national security. It's completely self-evident.

The only thing amazing to me is that it took, really, President Trump to put it in his national security objective. Every -- if you look, go back through the last President, every one of them fundamentally believed that. Nobody thought that our national security wasn't, in fact, based on our economic security. It's been true as far as you can go back -- and not just in the United States, with every other country in the world, right? I mean that -- that's -- there's a million quotes that all of us know with every major person that says that. So it doesn't surprise me.

This was a great question, and it doesn't seem like Ambassador Lighthizer really answered it. What are the chances that other countries will start applying economic/national security tariffs to U.S. products? How would the U.S. react if they did?

]]>Simon LesterSat, 06 Oct 2018 09:43:10 -0500https://worldtradelaw.typepad.com/ielpblog/2018/10/what-if-national-security-tariffs-spread-to-other-countries.htmlCall for Papers from the ANZSIL International Economic Law Interest Grouphttp://feedproxy.google.com/~r/ielpblog/~3/Aunzywweous/call-for-papers-from-the-anzsil-international-economic-law-interest-group.html
https://worldtradelaw.typepad.com/ielpblog/2018/10/call-for-papers-from-the-anzsil-international-economic-law-interest-group.htmlThis is from the ANZSIL International Economic Law Interest Group: CALL FOR PAPERS FOR AND INVITATION TO 2019 WORKSHOP Background The ANZSIL International Economic Law Interest Group (IELIG) was established in 2011 to provide a forum for those interested in...This is from the ANZSIL International Economic Law Interest Group:

CALL FOR PAPERS FOR AND INVITATION TO 2019 WORKSHOP

Background

The ANZSIL International Economic Law Interest Group (IELIG) was established in 2011 to provide a forum for those interested in international economic law, especially international regulation of trade, investment, intellectual property, and monetary law. The work of the Interest Group covers all areas of international economic law and its implementation in domestic law, embracing both theoretical and practical aspects. The IELIG aims to maintain relevance for government, practitioners and academics alike and encourages discussion andexchange of ideas among all those involved in this field.

2019 Workshop

The 2019 IELIG Workshop will be held in Christchurch at the University of Canterbury Staff Club on Friday, 15 February 2019. The workshop is kindly sponsored by Chapman Tripp. Its aim is to provide an informal setting for discussion of topical issues and works in progress. The programme will include a dedicated session for the presentation of current PhD research.

We invite paper proposals from ANZSIL members, practitioners in the field as well as staff from MFAT, DFAT, and the Attorney-General's Department. We particularly encourage PhD students and early career practitioners and academics to submit a proposal. Paper proposals may be on any topic within the work of the IELIG. All speakers are invited to publish their paper in the New Zealand Yearbook of International Law.

We also invite ANZSIL members and MFAT/DFAT/AGD staff to attend the workshop, even if not presenting a paper. For reasons of space, places for attendees may be limited, and will be allocated in order of RSVPs.

Submission of proposals

If you wish to submit a paper proposal, please submit an abstract of 300 words by email to christian.riffel@canterbury.ac.nz or anna@annakirk.co.nz by Friday, 14 December 2018.

]]>Simon LesterSat, 06 Oct 2018 09:37:14 -0500https://worldtradelaw.typepad.com/ielpblog/2018/10/call-for-papers-from-the-anzsil-international-economic-law-interest-group.htmlThe U.S.-Mexico-Canada (AKA the New NAFTA) Trade Deal: Trucking Serviceshttp://feedproxy.google.com/~r/ielpblog/~3/J81lekmzYGA/the-us-mexico-canada-aka-the-new-nafta-trade-deal-trucking-services.html
https://worldtradelaw.typepad.com/ielpblog/2018/10/the-us-mexico-canada-aka-the-new-nafta-trade-deal-trucking-services.htmlBack in 2001, a NAFTA Chapter 20 panel ruled that certain U.S. restrictions on Mexican trucking services violated U.S. commitments under the NAFTA. Implementation of this ruling by the U.S. has seen some stops and starts. The new NAFTA clarifies...Back in 2001, a NAFTA Chapter 20 panel ruled that certain U.S. restrictions on Mexican trucking services violated U.S. commitments under the NAFTA. Implementation of this ruling by the U.S. has seen some stops and starts. The new NAFTA clarifies and limits the U.S. obligation:

Notwithstanding Annex I-US-8, the United States reserves the right to adopt or maintain limitations on grants of authority for persons of Mexico to provide cross-border long-haul truck services in the territory of the United States outside the border commercial zones if the United States determines that limitations are required to address material harm or the threat of material harm to U.S. suppliers, operators, or drivers.1 The United States may only adopt such limitations on existing grants of authority if it determines that a change in circumstances warrants the limitation2 and if the limitation is required to address material harm.3 The Parties shall meet no later than five years after the entry into force of this agreement to exchange views on the operation of this entry.

1 For purposes of this entry, “material harm” means a significant loss in the share of the U.S. market for long-haul truck services held by persons of the United States caused by or attributable to persons of Mexico.

2 For greater certainty, a substantial increase in services supplied by the grantee may constitute a change in circumstances.

3 The Parties confirm their shared understanding that current operations under existing grants of authority as of the date of entry into force of this Agreement are not causing material harm.

... The text includes a fix for a longstanding problem related to environmental and safety concerns with Mexican-domiciled long-haul trucks that were provided access to roads throughout North America by NAFTA. The Clinton administration decided not to allow access beyond a limited border zone based on a series of Department of Transportation Inspector General reports on safety and environmental problems with the vehicles. Mexico challenged this policy before a NAFTA dispute settlement tribunal and won. The Bush administration provided access, which Congress then reversed. After a NAFTA tribunal authorized Mexico to impose $2.4 billion in trade sanctions against U.S. imports for failure to comply with the NAFTA terms, the Obama administration approved access for Mexican-domiciled trucks despite the failure of a pilot program that was established to test whether the vehicles complied with U.S. safety and environmental rules. The revised NAFTA text includes new U.S. exceptions to the old NAFTA trucking obligations that allow the U.S. government to limit grants of the authorizations required to provide cross-border long-haul trucking services.

Does this effectively resolve the dispute, with both sides comfortable with the current degree of market access and the "safeguards" in the new NAFTA? Are there other safeguards for services imports out there? How will the U.S. process for determining threat of material harm work?

]]>Simon LesterThu, 04 Oct 2018 03:18:40 -0500https://worldtradelaw.typepad.com/ielpblog/2018/10/the-us-mexico-canada-aka-the-new-nafta-trade-deal-trucking-services.htmlThe U.S.-Mexico-Canada (AKA the New NAFTA) Trade Deal: Withdrawing from the New NAFTAhttp://feedproxy.google.com/~r/ielpblog/~3/pGp0RyCNtdo/withdrawing-from-the-new-nafta.html
https://worldtradelaw.typepad.com/ielpblog/2018/10/withdrawing-from-the-new-nafta.htmlThe original NAFTA withdrawal provision, Article 2205, said this: A Party may withdraw from this Agreement six months after it provides written notice of withdrawal to the other Parties. If a Party withdraws, the Agreement shall remain in force for...The original NAFTA withdrawal provision, Article 2205, said this:

A Party may withdraw from this Agreement six months after it provides written notice of withdrawal to the other Parties. If a Party withdraws, the Agreement shall remain in force for the remaining Parties.

The new NAFTA withdrawal provision, Article 34.6, adds a sentence in the middle:

A Party may withdraw from this Agreement by providing written notice of withdrawal to the other Parties. A withdrawal shall take effect six months after a Party provides written notice to the other Parties. If a Party withdraws, the Agreement shall remain in force for the remaining Parties.

For comparison, the TPP withdrawal provision, Article 30.6, has a version of this added sentence as well:

1. Any Party may withdraw from this Agreement by providing written notice of withdrawal to the Depositary. A withdrawing Party shall simultaneously notify the other Parties of its withdrawal through the overall contact points designated under Article 27.5 (Contact Points).

2. A withdrawal shall take effect six months after a Party provides written notice to the Depositary under paragraph 1, unless the Parties agree on a different period. If a Party withdraws, this Agreement shall remain in force for the remaining Parties.

An important question under U.S. law is, who in the U.S. government has the authority to provide the written notice of withdrawal? Surely a letter from the Speaker of the House would not qualify. What about a letter from the President? Arguably, the President alone does not have this power either, as Congress has authority here as well. It will be interesting to see if the Statement of Administrative Action tries to clarify this point.

]]>Simon LesterWed, 03 Oct 2018 08:33:18 -0500https://worldtradelaw.typepad.com/ielpblog/2018/10/withdrawing-from-the-new-nafta.htmlGuest Post: The U.S.-Mexico-Canada (AKA the New NAFTA) Trade Deal: Laborhttp://feedproxy.google.com/~r/ielpblog/~3/wevL6cuGpfA/guest-post-the-us-mexico-canada-aka-the-new-nafta-trade-deal-labor.html
https://worldtradelaw.typepad.com/ielpblog/2018/10/guest-post-the-us-mexico-canada-aka-the-new-nafta-trade-deal-labor.htmlThis is a guest post from law prof Kathleen Claussen: The USTR fact sheet released in late August previewed that the USMCA labor provisions would be the “strongest of any trade agreement.” To evaluate this statement, rather than look at...This is a guest post from law prof Kathleen Claussen:

The USTR fact sheet released in late August previewed that the USMCA labor provisions would be the “strongest of any trade agreement.” To evaluate this statement, rather than look at the agreements in force or the status quo on the NAFTA (the North American Agreement on Labor Cooperation (NAALC), which was a side agreement to the NAFTA), the better point of comparison is the TPP Labor Chapter.

Putting to one side the widely-discussed increase in wages for certain auto workers in the Rules of Origin chapter, the draft USMCA labor text closely tracks the TPP with a small handful of notable exceptions. The most widely anticipated change is the addition of several footnotes to respond to the U.S.-Guatemala labor case panel report, the release of which post-dated the TPP negotiations. The U.S.-Guatemala panel report was criticized by Democrats and Republicans for having misunderstood some of the key language found in recent U.S. trade agreements, particularly the phrases “through a sustained or recurring course of action or inaction” and “in a manner affecting trade between the Parties.” USMCA adds “for greater certainty” footnotes each time those phrases appear:

8 For greater certainty, a “sustained or recurring course of action or inaction” is “sustained” where the course of action or inaction is consistent or ongoing, and is “recurring” where the course of action or inaction occurs periodically or repeatedly and when the occurrences are related or the same in nature. A course of action or inaction does not include an isolated instance or case.

9 For greater certainty, a “course of action or inaction” is “in a manner affecting trade or investment between the Parties” where the course involves: (1) a person or industry that produces goods or provides services traded between the Parties or has investment in the territory of the Party that has failed to comply with this obligation; or (2) a person or industry that produces goods or provides services that compete in the territory of a Party with goods or services of another Party.

The same footnotes appear in the environment chapter, although they do not appear in all chapters that use the “manner affecting trade” phrase (see, e.g., Article 27.8 on Anticorruption) – perhaps that will be changed in the scrub.

It is unsurprising that negotiators sought to clarify rather than change these politically delicate (May 10) phrases, especially since those phrases appear in TPA. It remains to be seen whether this additional language will help if any disputes materialize under this chapter. At least the “manner affecting trade” clarification should help claimant parties reach the necessary evidentiary threshold more easily than the U.S.-Guatemala panel permitted.

Apart from some small changes in the labor chapter on the process for consultations in potential labor disputes, as Simon noted, the state-to-state dispute settlement chapter, applicable also to labor disputes, looks pretty much the same as in the past. Improvements to the dispute settlement mechanism could enhance the enforceability of labor and other trade-plus provisions – a central outstanding criticism of Democrats. There may still be an opportunity to make important procedural modifications in the drafting of rules of procedure down the road.

In addition to these “for greater certainty” footnotes, three new articles feature prominently covering violence against workers, migrant workers, and sex-based discrimination in the workplace. The article on forced labor was also strengthened from the version in the TPP draft text to say that the parties “shall prohibit” (rather than “shall . . . discourage”) importation of goods produced by forced labor. Presumably, these changes were facilitated in part by the limitation of the agreement to Mexico and Canada and the exclusion of the Asian partners that were the focus of considerable labor-related attention in TPP (e.g., Vietnam, Malaysia). Not all is new, though; for example, the USMCA labor chapter does not include a corporate social responsibility article like that which appeared in TPP. (It appears that article may have just been moved to the end of the Investment chapter - Art. 14.17).

A final notable feature is the annex requiring Mexico to make a series of labor law reforms by January 1, 2019, or risk delaying the entry into force of the agreement. Still, just as the problem in the U.S.-Guatemala case was not the law on the books but rather its successful implementation and enforcement, it will take more than the passage of legislation to make these provisions effective in achieving the goals of labor advocates.

]]>Simon LesterTue, 02 Oct 2018 08:28:32 -0500https://worldtradelaw.typepad.com/ielpblog/2018/10/guest-post-the-us-mexico-canada-aka-the-new-nafta-trade-deal-labor.htmlThe U.S.-Mexico-Canada (AKA the New NAFTA) Trade Deal: Non-Violation Claimshttp://feedproxy.google.com/~r/ielpblog/~3/QbrzFcqKNxk/the-us-mexico-canada-aka-the-new-nafta-trade-deal-non-violation-claims.html
https://worldtradelaw.typepad.com/ielpblog/2018/10/the-us-mexico-canada-aka-the-new-nafta-trade-deal-non-violation-claims.htmlAs part of a quest to find the most obscure aspect of the new NAFTA, I point you to the scope of non-violation claims. This is from the new NAFTA: Article 31.2: Scope 1. Unless otherwise provided in this Agreement,...As part of a quest to find the most obscure aspect of the new NAFTA, I point you to the scope of non-violation claims. This is from the new NAFTA:

Article 31.2: Scope

1. Unless otherwise provided in this Agreement, the dispute settlement provisions of this Chapter shall apply:

...

(c) when a Party considers that a benefit it could reasonably have expected to accrue to it under Chapter 2 (National Treatment and Market Access for Goods), Chapter 3 (Agriculture), Chapter 4 (Rules of Origin), Chapter 5 (Origin Procedures), Chapter 6 (Textile and Apparel Goods), Chapter 7 (Customs Administration and Trade Facilitation), Chapter 9 (Sanitary and Phytosanitary Measures), Chapter 11 (Technical Barriers to Trade), Chapter 13 (Government Procurement), Chapter 15 (Cross-Border Trade in Services), or Chapter 20 (Intellectual Property), is being nullified or impaired as a result of the application of a measure of another Party that is not inconsistent with this Agreement.

1. Unless otherwise provided in this Agreement, the dispute settlement provisions of this Chapter shall apply:

...

(c) when a Party considers that a benefit it could reasonably have expected to accrue to it under Chapter 2 (National Treatment and Market Access for Goods), Chapter 3 (Rules of Origin and Origin Procedures), Chapter 4 (Textile and Apparel Goods), Chapter 5 (Customs Administration and Trade Facilitation), Chapter 8 (Technical Barriers to Trade), Chapter 10 (Cross-Border Trade in Services) or Chapter 15 (Government Procurement), is being nullified or impaired as a result of the application of a measure of another Party that is not inconsistent with this Agreement.

Except as otherwise provided in this Agreement or as the Parties otherwise agree, this Section shall apply with respect to the avoidance or settlement of all disputes between the Parties regarding the interpretation or application of this Agreement or wherever a Party considers that:

...

(c) a benefit the Party could reasonably have expected to accrue to it under Chapter Two (National Treatment and Market Access for Goods), Three (Agriculture), Four (Textiles and Apparel), Six (Rules of Origin and Origin Procedures), Twelve (Cross-Border Trade in Services), Seventeen (Government Procurement), or Eighteen (Intellectual Property Rights)1 is being nullified or impaired as a result of a measure that is not inconsistent with this Agreement, except that neither Party may invoke this subparagraph with respect to a benefit under Chapter Twelve (Cross-Border Trade in Services) or Eighteen (Intellectual Property Rights) if the measure is subject to an exception under Article 23.1 (General Exceptions).

1. Neither Party will invoke subparagraph (c) with respect to a measure affecting benefits under Chapter Eighteen (Intellectual Property Rights) during any period for which WTO Members have agreed not to initiate complaints of the type provided for under subparagraph 1(b) of Article XXIII of GATT 1994 under the TRIPS Agreement.

Given how few FTA disputes there are in general, and thus how unlikely any of this is to come up, it's interesting to see variations in the scope of non-violation that one country or another apparently cares about. SPS and IP seem to be the main battleground here.